An employee who recently transferred into the internal audit activity has been assigned to audit the accounts payable system. Which function, if previously performed by the auditor, would represent a conflict of interest?

• A.Signing timekeeping cards for subordinates.
• B.Writing procedures for the handling of duplicate payments.
• C.Monitoring the allowance for doubtful accounts.
• D.Reviewing shipping documents for accuracy.

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A staff auditor,nearly finished with an audit engagement,discovers that the director of marketing has a gambling habit. The gambling issue is not directly related to the existing engagement,and there is pressure to complete the current engagement. The auditor notes theproblem and forwards the information to the chief audit executive,but performs no further follow-up.
Which of the following statements is true about the auditor's actions?

• A.They are in violation of the Standards because the auditor did not properly follow up on a red flag that might indicate the existence of fraud.
• B.They are in violation of neither the IIA Code of Ethics nor the Standards.
• C.They are not in violation of the Standards but are in violation of the IIA Code of Ethics.
• D.They are in violation of the IIA Code of Ethics because the auditor withheld meaningful information.

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Which of the following would be considered a violation of The HAfs mandatory guidance on independence?

• A.The CAE updates the internal audit charter and presents it to the board for approval periodically, not on a specific timeline
• B.The CAE confirms to the board, at least once every five years, the organizational independence of the internal audit activity,
• C.The chief audit executive (CAE) reports functionally to the board and administratively to the chief financial officer.
• D.The board seeks senior management's recommendation before approving the annual salary adjustment of the CAE.

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Which of the following would provide the best assessment of an organization's ethical climate?

• A.Evidence of training provided to the board of directors on ethical issues.
• B.Number of years that directors have been appointed to the board.
• C.Frequency of fraud reported and results of subsequent investigations.
• D.Clarity and consistency of consequences imposed by the board of directors for ethical violations.

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Which of the following is least likely to be considered material in an audit of a medium-sized organization?

• A.An underpayment to the employee pension fund.
• B.A $1, 000 overstatement of the accrued-vacation payable account.
• C.Fraud resulting in a cash loss to the organization.
• D.A violation of a government statute.

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