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NEW QUESTION 40
A furniture manufacturer has installed a new fire sprinkler system at its central warehouse and canceled the existing fire insurance policy on that property. What change of risk response strategy does this course of action most likely reflect?

• A. From acceptance to reduction.
• B. From sharing to avoidance.
• C. From acceptance to avoidance.
• D. From sharing to reduction.

Answer: D

NEW QUESTION 41
An auditor identifies three errors in the sample of 25 entries selected for review (a 12 percent error rate). Based on this result, the auditor assumes that approximately 59 of the total population of 492 entries are incorrect. To reach this assumption, the auditor has used a technique known as which of the following?

• A. Acceptance sampling.
• B. Ratio estimation.
• C. Stratification.
• D. Variability tolerance.

Answer: B

NEW QUESTION 42
With regard to external assessments of an internal audit activity (IAA), which of the
following is the chief audit executive required to discuss with the board?

• A. External reviewer conflicts of interest, and the need for an external assessment more frequently than once every five years.
• B. External reviewer conflicts of interest, and the timeline of the external assessment.
• C. The simplest way for the external reviewer to join the IAA's organization, and the timeline of the external assessment.
• D. The need for an external assessment more frequently than once every five years, and the simplest method for the external reviewer to join the IAA's organization.

Answer: A

NEW QUESTION 43
Which of the following would be included in quality assurance and improvement program (QAIP) reporting?

• A. Conformance of individual engagements with the Standards,
• B. Annual summaries of consulting and audit engagements.
• C. Descriptions of standardized work practices.
• D. Outcomes of internal audit key performance indicators.

Answer: A

NEW QUESTION 44
The chief audit executive (CAE) of a mid-sized pharmaceutical organization has operational responsibility for the regulatory compliance function. The audit committee requests an assessment of regulatory compliance.
According to IIA guidance, which of the following is the CAE's best course of action?

• A. Have a proficient internal audit staff member perform the assessment and disclose the impairment in the audit report and to the board.
• B. Have a regulatory compliance staff member perform a self-assessment, to be reviewed by a proficient internal auditor.
• C. Have a proficient internal audit staff member perform the audit and report the results of the assessment directly to senior management and the board.
• D. Contract with a third-party entity or external auditor to complete the assessment and report the results to senior management and the board.

Answer: D

Explanation:
Section: Volume E

NEW QUESTION 45
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