Acceding to IIA guidance, which of the following statements is true regarding the risk assessment process performed by the internal audit activity?
Due to a recent system upgrade, an audit is planned to test the payroll process. Which of the following audit objectives would be most important to prevent fraud?
Verifying that recipients are valid employees is crucial in preventing payroll fraud. This audit objective ensures that only legitimate employees receive payments, thereby mitigating the risk of ghost employees or payments to terminated employees. While verifying amounts, payment timeliness, and benefit deductions are important, ensuring the validity of recipients directly addresses the potential for fraudulent activities in the payroll process. Reference:
IIA Practice Guide on Auditing Employee Compensation and Benefits.
IIA Standard 1220: Due Professional Care.
The board has asked the internal audit activity (IAA) to be involved in the organization's enterprise risk management process. Which of the following activities is appropriate for IAA to perform without safeguards?
According to IIA guidance, the internal audit activity (IAA) can evaluate risk management processes without the need for safeguards. This activity aligns with the internal auditors' role in providing assurance on the effectiveness of the risk management process. Coaching management (Option A) and developing risk management strategies (Option B) involve direct participation in management functions, which could impair objectivity and require safeguards. Facilitating the identification and evaluation of risks (Option C) might also involve a degree of management participation that could compromise independence without proper safeguards. Reference: IIA Standard 2120 -- Risk Management, IIA Practice Guide -- Assessing the Adequacy of Risk Management Processes
According to the Standards, which of the following is leastimportant in determining the adequacy of an annual audit plan?
According to the IIA Standards, the primary factors in determining the adequacy of an annual audit plan include sufficiency, appropriateness, and effective deployment of resources. These elements ensure that the internal audit activity can effectively cover key risk areas, provide relevant assurance, and utilize resources efficiently. While cost-effectiveness is important, it is considered less critical compared to ensuring the audit plan is comprehensive and appropriately targeted. Reference: = IIA Standard 2010 - Planning.
An internal auditor develops an engagement observation related to an organization's accumulation of large travel advances. The auditor observes that the organization's procedures do not require justification for travel advances greater than a specific amount Which of the following best describes the organization's procedures?
The best description of the organization's procedures in this context is that they represent a cause of the organization's accumulation of large travel advances. The lack of a requirement for justification for travel advances greater than a specific amount is a procedural gap that directly contributes to the accumulation of large travel advances. This gap in the procedure is the root cause that leads to the observed condition of large travel advances accumulating without sufficient oversight or justification. Reference: IIA's International Standards for the Professional Practice of Internal Auditing, Standard 2310 -- Identifying Information, and related practice advisories on root cause analysis in audit observations.
