What is the purpose of a secondary control?

• A.It partially reduces the residual risk level when a key control does not operate effectively.
• B.It replaces primary controls that are either ineffective or cannot fully mitigate a risk.
• C.It helps to ensure the completeness and accuracy of automated controls in a system environment.
• D.lt combines with other controls to help reduce significant risk exposures to an acceptable level.

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According to COSO, which of the following describes a principle related to the control environment?

• A.The organization establishes appropriate authorities and responsibilities in the pursuit of objectives.
• B.The organization identifies and assesses changes that could significantly impact the system of internal control.
• C.The organization performs evaluations to ascertain whether internal control components are present and functioning.
• D.The organization selects and develops control activities that contribute to the mitigation of risks.

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A new internal audit activity is creating its first charter. According to IIA guidance, which of the following objectives would be appropriate for inclusion in the charter?

• A.Assist management in implementing recommended control improvements.
• B.Oversee the establishment and administration of an effective risk management program.
• C.Evaluate the adequacy and effectiveness of the organization's governance activities.
• D.Continuously monitor the organization's overall risk activities in relation to its risk appetite.

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Which of the following conditions is the most likely indicator of fraud?

• A.Lower earnings occur during the industry's down cycle.
• B.A manager regularly assumes subordinates' duties.
• C.Commissions are paid based on verified increases to sales.
• D.Departmental reports are consistently issued in an untimely manner.

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The security department uncovered what appears to be a complex fraud in the accounting department. The CEO has requested the internal audit activity to investigate the fraud. If the internal audit staff lacks the expertise to conduct the investigation, how should the chief audit executive proceed?

• A.Select a member of the accounting department who is not involved in the fraud to join the investigation team in a consulting capacity.
• B.Disclose the deficiency, and request that the investigation be reassigned to the first line of defense.
• C.Outsource the sensitive investigation to a third-party consultant with fraud expertise.
• D.Proceed with the investigation, as internal auditors are not required to have fraud expertise.

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