An organization's internal auditors are reviewing production costs at a gas-powered electrical generating plant. They identify a serious problem with the accuracy of carbon dioxide emissions reported to the environmental regulatory agency, due to computer errors. The auditors should immediately report the concern to:

• A.The risk management function.
• B.Plant management.
• C.The regulatory agency.
• D.A plant health and safety officer.

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During the planning phase of an audit of the treasury function, an internal auditor conducted a risk assessment of the function in order to:

• A.Report any high-risk exposures of the treasury function to management and the board.
• B.Determine whether appropriate resources are present to carry out the treasury function.
• C.Comply with the internal audit charter and applicable regulatory requirements.
• D.Identify areas of the treasury function that should be considered for potential engagement objectives.

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During an audit of the accounts receivable (AR) process, an internal auditor noted that reconciliations are still not performed regularly by the AR staff, a recommendation that was made following a previous audit.
Monitoring by the financial reporting function has failed to detect the shortcoming. Both the financial reporting function and AR report to the controller, who is responsible for implementing action plans. Which of the following supports the internal auditor's decision to combine both observations into one reported finding?

• A.The observation has a common process, and the action plan for the observation has a common owner.
• B.The observation has a common control, and it was noted in a prior audit.
• C.The observation relates to the same control activity within a common process.
• D.The observation was made during the same audit, and the action plan has a common owner.

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Which of the following statements is true regarding the communication of audit engagement observations?

• A.Criteria, condition, cause, and effect must be communicated for all engagement observations.
• B.Criteria, condition, cause, and effect must be communicated for material observations only
• C.Criteria, condition, cause, and effect do not need to be communicated for insignificant observations with adequate compensating key controls.
• D.Criteria, condition, cause, and effect must be communicated for material observations and significant deficiencies only

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Given the scarcity of internal audit resources, a chief audit executive (CAE) decides not to schedule a follow-up of audit recommendations when developing engagement work schedules. Why does the CAE's decision violate the Standards?

• A.Follow-up actions should take priority over new engagements in scheduling.
• B.Lack of resources is not a sufficient reason to forgo a follow-up.
• C.It is not the CAE's responsibility to establish a process for a follow-up.
• D.When resources are scarce, the follow-up can be incorporated into the next engagement.

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