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NEW QUESTION 35
Which of the following is an example of a risk management avoidance response?

• A. Recalling a product.
• B. Obtaining product insurance.
• C. Outsourcing production.
• D. Exiting a marketplace.

Answer: D

NEW QUESTION 36
Which of the following is an example of a management control technique?

• A. A risk assessment.
• B. A budget.
• C. The control environment.
• D. The board of directors.

Answer: B

NEW QUESTION 37
Which of the following would be the most important consideration by the internal audit activity when selecting employees to perform an internal quality assessment?

• A. Their reporting line within the organization.
• B. Previous experience working with the internal audit activity.
• C. Their understanding of auditing standards.
• D. The nature of their regular duties and responsibilities.

Answer: C

NEW QUESTION 38
The security department uncovered what appears to be a complex fraud in the accounting department. The CEO has requested the internal audit activity to investigate the fraud. If the internal audit staff lacks the expertise to conduct the investigation, how should the chief audit executive proceed?

• A. Disclose the deficiency, and request that the investigation be reassigned to the first line of defense.
• B. Select a member of the accounting department who is not involved in the fraud to join the investigation team in a consulting capacity.
• C. Proceed with the investigation, as internal auditors are not required to have fraud expertise.
• D. Outsource the sensitive investigation to a third-party consultant with fraud expertise.

Answer: D

NEW QUESTION 39
Which of the following offers the best evidence that the internal audit activity has achieved organizational independence?

• A. The internal audit charter is drafted properly and approved by the appropriate parties.
• B. The mission statement and strategy of the internal audit activity demonstrates alignment to organizational objectives.
• C. The chief audit executive reports both functionally and administratively to the CEO.
• D. An independent third party has assessed the organization's system of internal controls to be adequate and effective.

Answer: C

NEW QUESTION 40
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