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What is the primary purpose of a preliminary survey?
Comprehensive and Detailed Step-by-Step Explanation:
Preliminary Survey Purpose: The survey is conducted to gather sufficient information to understand the process, environment, and related risks. This understanding serves as a foundation for planning the engagement.
Other Options:
Option A: Developing a risk and control matrix is a subsequent step after understanding the process.
Option C: Determining the purpose of the engagement is established before conducting the survey.
Thus, the correct answer is B.
Duties in a purchasing system are segregated and performed by different people. One person orders the goods, another person receives the goods, and another pays for the goods. This is an example of which of the following controls?
Comprehensive and Detailed Step-by-Step Explanation:
Reference to Internal Controls:
Preventive controls are designed to prevent errors, fraud, or irregularities before they occur by ensuring that processes and activities are performed correctly from the start.
Standard 2130 - Control: Internal auditors assess the design and effectiveness of controls to prevent risks from materializing.
Reasoning:
Option A is correct because segregation of duties (ordering, receiving, and paying) is a preventive control, as it prevents a single person from having the authority to initiate, authorize, and complete a transaction, reducing the risk of fraud or errors.
Option B (Directive) would focus on guiding behavior, such as setting policies or expectations.
Option C (Detective) refers to controls that identify and detect errors after they occur, such as audits or reviews.
Impact of Segregation of Duties:
By ensuring duties are segregated, organizations minimize the risk of fraudulent activities and errors, thus acting as a preventive measure.
Which of the following statements best describes quality audit workpapers?
Comprehensive and Detailed Step-by-Step Explanation:
Reference to IIA Standards:
Standard 2330 - Documenting Information: Workpapers must be sufficient, reliable, relevant, and useful to support audit findings and conclusions.
Practice Advisory: Clear and complete documentation enhances understanding and ensures consistency in audit conclusions.
Characteristics of Quality Workpapers:
They should clearly articulate audit procedures, results, and conclusions in a way that another auditor or stakeholder can understand and rely on them.
While electronic and indexed workpapers (Option B) are desirable for organization, they are not defining characteristics of quality.
Which of the following is an element of a well-formed audit recommendation?
Comprehensive and Detailed Step-by-Step Explanation:
Reference to Audit Recommendations:
According to the IIA Standards, a recommendation must be actionable, specific, and designed to address the root cause of an identified issue.
Reasoning:
Option B is correct because effective recommendations focus on preventing recurrence by addressing root causes or implementing control measures.
Option A (factual evidence) supports findings but does not constitute the recommendation itself.
Option C (factors allowing the condition) provides context for findings but does not include actionable measures to resolve or prevent the issue.
Key Components of a Recommendation:
Recommendations should propose practical solutions to mitigate risks, improve processes, or enhance controls.
Measures to prevent recurrence align with the goal of sustainable improvements.
As part of the annual training plan, the chief audit executive (CAE) has arranged for a local audit training institute to provide an in-house training session for the internal audit team. Which of the following best explains the primary purpose of this approach?
Comprehensive and Detailed Step-by-Step Explanation:
Reference to IIA Standards:
Standard 1210 - Proficiency: Internal auditors must possess the knowledge, skills, and competencies needed to perform their responsibilities.
Continuous professional development ensures the internal audit team maintains proficiency.
Reasoning:
Option A is correct because training enhances the skills and proficiency of the internal audit team, aligning with the requirement to maintain technical and professional competence.
Option B (organizational status for independence) relates to governance and reporting relationships, not training.
Option C (assessing development efforts) is a secondary benefit and not the primary goal of providing training.
Impact of Training:
A well-trained audit team improves the quality of engagements, ensures adherence to professional standards, and supports the overall effectiveness of the internal audit activity.
