Productivity statistics are provided quarterly to a company's board of directors. An auditor checked
the ratios and other statistics in the four most recent reports. The auditor used scratch paper and
copies of the board reports to verify the accuracy of computations and compared the data used in
the computations with supporting documents. The auditor wrote a note describing this work for the
workpapers and then discarded the scratch paper and report copies. The auditor's note stated.
“The ratios and other statistics in the quarterly board reports were checked for the last four
quarters, and appropriate supporting documents were examined. All amounts appear to be
appropriate.”
In this situation:

A.

Four quarters is not a large enough sample on which to base a conclusion.

B.

The auditor's workpapers are not sufficient to facilitate an efficient review of the auditor's work.

C.

The auditor should have included the scratch paper in the workpapers.

D.

The auditor should have considered whether the information in the board report was compiled
efficiently

Which of the following is an example of the verification of internal documentary evidence?

A.

Reviewing a carrier's bill of lading.

B.

Reconciling a vendor's month-end statement.

C.

Vouching a copy of a sales invoice to receivables.

D.

Recalculating a customer's purchase order.

The balanced scorecard approach differs from traditional performance measurement approaches
because it adds which of the following measures?
I. Financial measures.
II. Internal business process measures.
III. Client satisfaction measures.
IV. Innovation and learning measures.

A.

I only

B.

II and IV only

C.

III and IV only

D.

II, III, and IV only

An auditor prepared a workpaper that consisted of a list of employee names and identification
numbers as well as the following statement:
“A statistical sample of 40 employee personnel files was selected to verify that they contain all
documents required by company policy 501 (copy attached). No exceptions were noted.”
The auditor did not place any audit verification symbols on this workpaper. Which of the following
changes would most improve the auditor's workpaper?

A.

Use of audit verification symbols to show that each file was examined.

B.

Removal of the employee names to protect their confidentiality.

C.

Justification for the sample size.

D.

Listing of the actual documents examined for each employee

During an interview with a manager in a company's claims department, an auditor noted that the
manager became nervous and changed the subject whenever the auditor raised questions about
certain types of claims. The manager's answers were consistent with company policies and
procedures. When documenting the interview, the auditor should:

A.

Document the manager's answers, noting the nature of the nonverbal communication.

B.

Document the manager's answers but not the nonverbal communication because it is
subjective and is not corroborated.

C.

Conclude that the nonverbal communication is persuasive and that sufficient evidence exists to
begin a fraud investigation.

D.

Disregard the interview entirely because the verbal and nonverbal communications were
contradictory.

Which of the following is true of engagement recommendations?
I. Specific suggestions for implementation must be included.
II. The internal auditor's observations and conclusions may serve as the basis.
III. Actions to correct existing conditions or improve operations may be included.
IV. Approaches to correcting or enhancing performance may be suggested.

A.

I only

B.

III only

C.

I, III, and IV only

D.

II, III, and IV only

Which of the following performance criteria would be most useful when measuring the
performance of a customer service desk? 

A.

 The number of customer inquiries recorded per day.

B.

The percentage of customer issues resolved within 24 hours.

C.

The number of customer complaints recorded per day.

D.

The percentage of total customers served per day.

The efficiency of internal audit operations is best enhanced if workpaper standards:

A.

Permit the extent of documentation to vary according to engagement objectives.

B.

Require supervisors to initial and date each workpaper that they review.

C.

Allow access to workpapers by external parties if approved by senior management or the audit
committee.

D.

Mandate the workpaper retention period

According to the International Professional Practices Framework, which of the following
statements is correct regarding the communication of audit results?
I. Summary reports may be issued separately from or in conjunction with the final report.
II. Interim reports may be written or oral.
III. Detailed reports should always be issued to the audit committee.
IV. Interim reports should be used to communicate information which requires immediate attention.

A.

I and III only

B.

II and IV only

C.

I, II, and IV only

D.

I, II, III, and IV.

The chief audit executive (CAE) determined that based on management's oral response, the
action taken regarding an audit observation was sufficient when weighted against the relative
importance of the audit recommendation. Which of the following is the most appropriate step for
the internal auditor to take next?

A.

Initiate a follow-up audit to ensure that action has really been taken.

B.

Follow-up with management until a written response is obtained.

C.

Escalate the issue to the board and get their position on the issue.

D.

Note in the permanent file that follow-up needs to be performed as part of the next
engagement.

Which of the following will be an appropriate course of action when an auditor disagrees with a
client about a well-documented audit finding?

A.

Include both the audit finding and the client's position in the audit report.

B.

Defer reporting the item and plan to perform more detailed work during the next audit.

C.

Change the finding so that it is acceptable to the client.

D.

 Address the issue with senior management and the board for resolution prior to issuing the final
report.

A governmental auditor was assigned to determine reasons why the students in one region scored
significantly higher on education evaluation tests than did the students in another region. Previous
research showed that there is a direct correlation between public financial support and student
results. Which of the following is most likely to explain the difference in the regional results?

A.

The more successful region spends 30 percent more money on education than does the other region.

B.

A higher percentage of the general tax fund is spent on education in the more successful region
than in the other region.

C.

The more successful region spends more money per student on education than does the other
region.

D.

The more successful region has increased educational spending by an average of 10 percent
each year for the last three years, whereas the other region's increase averaged only three
percent.