Which of the following lists the audit activities in the order in which they would generally be completed during a preliminary survey?
I. Write detailed audit procedures.
II. Identify client objectives, goals, and standards.
III. Identify risks and controls intended to prevent associated losses.
IV. Determine relevant engagement objectives.

• A.II, I, IV, III.
• B.II, III, IV, I.
• C.III, IV, II, I.
• D.II, IV, I, III.

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Which of the following scenarios would represent the greatest threat to the authority of the internal audit activity (IAA)?

• A.Responsibility for risk management processes were removed from the IAA and placed under a newly created chief risk officer.
• B.A change was implemented requiring the IAA to report administratively to the organization's chief legal counsel rather than the board.
• C.An internal auditor was informed by the chief financial officer that client survey results would be unfavorable unless the auditor changed a finding in the report.
• D.The IAA was denied access to expenditure and budget requirement reports because the reports were considered to be financial administrative matters.

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An audit to test the system of controls over the purchase, distribution, and use of radioactive material is being conducted at a company's plants. The process is well documented, and employees in the safety department are very familiar with the department's procedures. Since the purchasing and facilities departments are involved in the process, the auditor is considering reviewing their radioactive material-handling procedures as well. The auditor should:

• A.Have confidence in the rigorous and detailed safety department procedures, since that department has the main responsibility for radiation safety, and should not use audit time to review other departments.
• B.Adjust the engagement schedule and budget, if needed, and interview the appropriate individuals in the purchasing and facilities departments to ascertain whether additional controls exist that complement those identified within the safety department.
• C.Test the controls identified within the safety department; if results are unfavorable, the auditor should consider whether to involve the other departments.
• D.Defer questions regarding purchasing, facilities, and other departments until audit projects can be scheduled for those departments.

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A chief audit executive (CAE) submits internal audit activity (IAA) plans and information about significant interim changes to senior management and the board for review. Which other piece of information should the CAE provide to senior management and the board?

• A.The CAE's preferred statistical analysis methods and relevant software to be utilized.
• B.Identification of proposed consultants and support staff for the IA
• C.Resource requirements and resource limitations.
• D.The most recent engagement of each member of the audit staff and its duration.

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Which of the following is the most significant disadvantage of using checklists to evaluate internal controls?

• A.They require yes/no responses to specific questions, not open-ended responses.
• B.They are useful in assessing risk.
• C.They serve as a reminder of what controls should exist in a process.
• D.They do not capture all controls that may exist.

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