An organization is considering purchasing a new banking software system and has asked the internal audit activity to evaluate the system. An internal auditor assigned to perform the engagement worked at the software company two years ago and is familiar with the system's design strengths and weaknesses. Which of the following is true regarding impairment to the auditor's objectivity?

• A.The auditor must disclose to the chief audit executive that this situation may impair her objectivity.
• B.The auditor should decline to perform the audit because personal conflicts of interest are likely.
• C.This situation does not necessitate any action related to the auditor's objectivity.
• D.The auditor can provide only consulting services, not assurance.

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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.Defer questions regarding purchasing, facilities, and other departments until audit projects can be scheduled for those departments.
• D.Test the controls identified within the safety department; if results are unfavorable, the auditor should consider whether to involve the other departments.

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Which of the following should be the first step that an internal auditor takes to establish data integrity when building an audit working copy of a large database?

• A.Ensure that the data is efficiently organized within the database.
• B.Search for anomalies in the extracted information.
• C.Verify that all required data was downloaded.
• D.Review the data for statistical patterns.

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Which of the following is not an appropriate type of coordination between the internal audit activity and regulatory auditors?

• A.Internal auditors review copies of regulatory reports in planning related internal engagements.
• B.Internal auditors perform fieldwork at the direction of the regulatory auditors.
• C.Regulatory auditors share their perspective on risk management, control, and governance with the internal auditors.
• D.Regulatory and internal auditors exchange information about planned activities.

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An internal auditor is reviewing the results of an employee survey at a mining company. Which of the following would alert the auditor to a potential ethics issue?

• A.Thirty percent of employees feel confident in raising concerns without a fear of retaliation.
• B.Employees with longer work experience believe that they deserve more privileges than new hires.
• C.Women account for 20% of the total number of employees in the company.
• D.Most employees believe that transparent and fair decision-making forms the basis of business ethics.

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