This chief audit executive (CAE) engaged an internal auditor to consult on an organization's complex information technology system. Shortly after beginning the engagement, the auditor unexpectedly resigned.
Unfortunately, this auditor was the only available auditor with the necessary expertise. The CAE will not be able to hire someone with similar expertise in time to meet a regulatory deadline.
Which of the following would be the best course of action for the CAE to take?

• A.Remove the planned engagement from the audit plan and explain to senior management the problems with moving forward without an auditor with the necessary expertise.
• B.Delay the engagement and inform the board of the situation, asking them to provide acceptable alternatives for completing the engagement.
• C.Ask that a senior member of the organization's IT department with the required systems expertise join the audit team to assist in completing the engagement.
• D.Continue with the engagement in order to meet the regulatory deadline, but highlight areas in the final report that might need to be revised in the future.

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While preparing for an audit of senior management expenses, the chief audit executive (CAE) learns that management is unable to locate a number of original expense claims to support the related disbursements. She decides to defer the engagement until they can be located. Which of the following principles likely guided the CAE's decision?

• A.Due professional care.
• B.Objectivity.
• C.Independence.
• D.Proficiency.

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An internal auditor completed an audit of a bank's loan department and found all significant risks to be managed adequately through effective internal controls. Which of the following would be an appropriate conclusion to report to management?

• A.The inherent risk is higher than or equal to the risk tolerance.
• B.The inherent risk is lower than or equal to the risk tolerance.
• C.The residual risk is lower than or equal to the risk appetite.
• D.The residual risk is higher than or equal to the risk appetite.

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Who is responsible for setting the risk appetite?

• A.Operations management.
• B.Board of directors.
• C.Chief risk officer.
• D.External auditors.

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An internal auditor would like to identify the involvement of various organizational units in handling employee travel reimbursement claims. Which of the following methods would be most effective and efficient in completing this task?

• A.Interviewing.
• B.Distributing questionnaires.
• C.Process mapping.
• D.Monitoring.

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