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NEW QUESTION 30 Which of the following scenarios best illustrates a rationalization as the root cause of potential fraud?

• A. The organization is slowly phasing out three mature products that produce the highest commissions for the sales staff.
• B. Managers who have been with the organization for several decades become aware that newly hired, younger managers are being moved more quickly into senior positions.
• C. Security cameras that monitor cash handling at the register are not functioning.
• D. The controller at a nationwide manufacturing company recently opted to no longer require two-week mandatory vacations for accounting staff.

Answer: D   NEW QUESTION 31 Which of the following control methods is effective in reducing the risk of purchasing-scheme fraud? 1. Periodically reviewing the vendor list for unusual vendors and addresses. 2. Segregating duties for amount purchasing, receiving, shipping, and accounting. 3. Validating sequential integrity of purchase orders. 4. Verifying the validity of invoices with post office box addresses.

• A. 3 and 4 only
• B. 1, 2, and 4 only
• C. 1 and 2 only
• D. 1, 2, 3, and 4

Answer: A   NEW QUESTION 32 The chief audit executive (CAE) is planning to conduct an internal assessment of the internal audit activity (IAA). Part of this assessment will include benchmarking. According to IIA guidance, which of the following qualitative metrics would be appropriate for the CAE to use? 1. Average client customer satisfaction score for a given year. 2. Client survey comments on how to improve the IAA. 3. Auditor interviews once an audit has been completed. 4. Percentage of audits completed within 90 days.

• A. 3 and 4.
• B. 2 and 3.
• C. 1 and 3.
• D. 1 and 2.

Answer: B   NEW QUESTION 33 A manufacturing line supervisor joins the internal audit activity for a two-year rotational job assignment and is assigned to an accounts receivable audit. With regard to this assignment, which of the following should be the primary concern of the audit manager?

• A. Individual objectivity.
• B. Individual independence.
• C. Organizational independence.
• D. Due professional care.

Answer: D   NEW QUESTION 34 Why is it important for the chief audit executive to periodically review the audit charter and present the results to senior management and the board?

• A. Because management requires the review to measure effectiveness of the internal audit activity.
• B. So that there is assurance of the internal audit staff's proficiency to complete audit activities.
• C. Because changes in the organization may impair the internal audit activity's ability to meet its objectives.
• D. So that the individual objectivity of the internal audit staff can be more clearly established.

Answer: C   NEW QUESTION 35 ......