A report prepared by the internal audit activity contains several observations that disclose proprietary information regarding the organization's manufacturing process. According to the International Professional Practices Framework, which of the following is the appropriate treatment for this report?

• A.Remove the observations and report verbally to senior management.
• B.Require a separate non-disclosure statement from each recipient.
• C.Distribute the report only to the board to protect disclosure.
• D.Disclose and distribute this information in a separate report.

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Questions used to interrogate individuals suspected of fraud should:

• A.Cover more than one subject or topic.
• B.Adhere to a predetermined order.
• C.Move from general to specific.
• D.Direct the individual to a desired answer.

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An internal auditor for a financial institution has just completed an audit of loan processing. Of the 81 loans approved by the loan committee, the auditor found seven loans which exceeded the approved amount. Which of the following actions would be inappropriate on the part of the auditor?

• A.Examine the seven loans to determine if there is a pattern. Summarize amounts and include in the engagement final communication.
• B.Report the amounts to the loan committee and leave it up to them to correct. Take no further follow-up action at this time and do not include the items in the engagement final communication.
• C.Follow up with the appropriate vice president and include the vice president's acknowledgment of the situation in the engagement final communication.
• D.Determine the amount of the differences and make an assessment as to whether the dollar differences are material. If the amounts are not material, not in violation of government regulations, and can be rationally explained, omit the observation from the engagement final communication.

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According to the Standards, which of the following best describes what must be agreed upon to establish an understanding with clients prior to starting a consulting engagement?

• A.The engagement objectives, access to clients records, and expectations.
• B.The engagement objectives, scope, and time frame to complete the engagement.
• C.The engagement scope, opportunities for making significant improvements, and client expectations.
• D.The engagement objectives, scope, respective responsibilities, and other client expectations.

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The following is an excerpt from an audit engagement workpaper:
A Company
Accounts Receivable
Date
Objective. To determine if the computer system is correctly recording all accounts receivable transactions.
Procedures: Judgmental selection of a sample of all accounts receivable balances greater than $50,000 for positive confirmation of balances.
Conclusion: Based on the results of testing wherein all but three confirmations were returned, the accounts receivable balance is fairly presented in all material respects.
Which of the following is true regarding the workpaper?

• A.The audit procedures used are not consistent with the audit objective.
• B.A conclusion should be reached only for the results of overall testing, not for individual procedures.
• C.It is not appropriate to judgmentally select a sample when testing accounts receivable.
• D.The format of the workpaper does not conform to the standard format for workpapers.

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