A global manufacturing company has three regional offices. The chief audit executive (CAE) is concerned about the cost of an upcoming external quality assessment of the internal audit activity. The last external assessment was performed six years ago. Recently, the internal audit staff at one of the regional offices performed an internal assessment. To ensure conformance with the Standards, what is the most appropriate action for the CAE to take?

• A.Request from the audit committee an additional budget and an extension so that the external assessment could be performed next year.
• B.Review the results of the internal assessment, identify weaknesses, and implement improvements at the remaining offices.
• C.Request that an external assessor validate the results of the internal assessment and review the remaining offices.
• D.Request the regional office that performed the internal assessment to perform an assessment of the remaining offices.

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Which of the following actions indicates a lack of due professional care by an internal auditor performing an audit of a store's cash function?

• A.The audit report included a well-supported recommendation for a reduction in staff even though such a reduction might adversely impact morale.
• B.The auditor tested samples of transactions to test the cash function's process flows.
• C.After determining that the cash function internal controls were strong, the audit report assured senior management that fraud was not present.
• D.The auditor discovered an instance of potential fraud and reported it immediately to management, but did not alert authorities outside the organization.

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An organization has developed a model to determine the most profitable rate of production. The organization varies the cost of labor in the model to determine how much the changes affect the optimal production level.
Which type of analysis does this scenario demonstrate?

• A.Forecast.
• B.Sensitivity.
• C.Critical path.
• D.Decision.

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Which of the following actions by a chief audit executive is most likely to prevent exaggerated sales reports by division management?
I.Hire a new internal auditor who has fraud investigation credentials.
II.
Assist the controller in developing and monitoring a series of business process indicators which are historically correlated with, but independent of, sales.
III.
Announce a series of internal audit engagements focusing on compliance with corporate sales-reporting policies.
IV.
Ask the president and the board to issue a statement of corporate policy stressing the importance of accurate management reporting and the negative consequences of intentional misreporting.

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

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A manufacturing organization's chief audit executive (CAE) was approached by the head of security from one of the manufacturer's third party suppliers The head of security requested internal audit records from a recent audit engagement involving the third-party supplier The head of security believed those records contained information that would enable to identify employees of the third-party supplier who may be involved m fraudulent activities What is the most appropriate course of action for the CAE?

• A.Consult with the manufacturer's senior management to determine whether releasing tie records would be appropriate
• B.Obtain approval from the manufacturer's audit committee regarding the release of audit records
• C.Deny access to the records as the third party supplier s security learn should be able to investigate then own employees.
• D.Release the records but first remove all data regarding the manufacturing organization s internal actions and procedures

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