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NEW QUESTION 52
Which of the following factors have the greatest influence on the independence of the internal audit activity?

  • A. Quality assessments and cultural biases of the internal audit activity.
  • B. Rotational assignments and familiarity of the internal audit activity.
  • C. Employee incentives and self review of the internal audit activity.
  • D. Organizational positioning and scope control of the internal audit activity.

Answer: D

 

NEW QUESTION 53
An internal auditor has taken an attributes sample of a bank's existing loan portfolio. Out of a sample of 60 loans, the auditor founD.
Four that were not properly collateralized.
Five that were not in compliance with bank policies (other than lack of collateralization).
Four that were part of a related-party group, but were set up as separate loan entities.Of the 60 loans selected in the sample, these errors were noted on a total of 10 loans. Several loans had multiple problems. Which of the following conclusions can the auditor reach from these observations?
There is sufficient evidence that fraudulent activity is taking place by one or more of the bank's lending officers.
The financial statements will be misstated as a result of these actions.
There are significant noncompliance audit findings that should be reported.

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

Answer: D

 

NEW QUESTION 54
Which of the following best describes the misdirection of payments on accounts receivable to an employee's bank account?

  • A. Fraud open on the books.
  • B. Fraud off the books.
  • C. Fraud hidden on the books.
  • D. Fraud on the balance sheet.

Answer: B

Explanation:
Section: Volume F

 

NEW QUESTION 55
In the annual audit of the financial statements of a company with high inherent risk and a very strong control system, the external auditor may be able to allow detection risk to rise because.

  • A. Control risk has been assessed at a lower level.
  • B. The company's operations are very susceptible to misstatements.
  • C. Audit risk has been reduced.
  • D. Whenever inherent risk is high, control risk is disregarded.

Answer: A

 

NEW QUESTION 56
Reportable audit findings must be:
I. Documented by facts.
II. Supported by relevant evidence.
III. Agreed to by management of the audited area.
IV. Convincing enough to compel corrective action.

  • A. I, II, and IV only
  • B. II and III only
  • C. I, II, III, and IV.
  • D. I and IV only

Answer: A

 

NEW QUESTION 57
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