The chief audit executive (CAE) is planning to conduct an internal assessment of the internal audit activity (IAA). Part of this assessment will include benchmarking. According to IIA guidance, which of the following qualitative metrics would be appropriate for the CAE to use?
1. Average client customer satisfaction score for a given year.
2. Client survey comments on how to improve the IAA.
3. Auditor interviews once an audit has been completed.
4. Percentage of audits completed within 90 days.

• A.1 and 2.
• B.1 and 3.
• C.2 and 3.
• D.3 and 4.

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During an audit engagement, an internal auditor finds that management is not complying with previous commitments made to the external auditors. However, the auditor determines management's actions to be justified due to significant changes in the business. The best course of action for the auditor to take would be to:

• A.Inform the external auditors and seek their guidance.
• B.Proceed with the audit engagement and assess the changes actually implemented by management.
• C.Compare the recommended changes against the changes made by management and advise management which action to take.
• D.Inform the external auditors and remove the associated work from the internal audit scope.

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Which of the following statements is true regarding electronic funds transfer (EFT)?

• A.EFT is a popular mechanism for improving efficiency, but results in less internal control.
• B.EFT significantly reduces the risk of fraud by eliminating the need for authorizations.
• C.EFT eliminates payment delays due mostly to the introduction of automated cash controls,
• D.EFT makes use of numerous automated controls, but is still vulnerable to fraudulent accounting entries.

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Fraud is most frequently detected by:

• A.Following up on tips from employees or citizens.
• B.Following up on analytical review of high-risk areas.
• C.Performing periodic reconciliations over cash and other assets.
• D.Performing unannounced audits or reviews of programs or departments.

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Which of the following is the most important limitation on the effectiveness of audit committees?

• A.Audit committees devote most of their efforts to external audit concerns and do not pay much attention to internal auditing and the overall control environment.
• B.Audit committees may be composed of independent directors; however, those directors may have close personal and professional friendships with management.
• C.Audit committee members do not normally have degrees in the accounting or auditing fields.
• D.Audit committee members are compensated by the organization and thus favor a stockholder view.

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