According to Maslow's hierarchy of needs theory, which of the following best describes a strategy where a manager offers an assignment to a subordinate specifically to support his professional growth and future advancement^

1. A. Esteem by colleagues.
2. B. Self-fulfillment.
3. C. Sense of belonging in the organization
4. D. Job security.

Correct Answer: B
According to Maslow's hierarchy of needs theory, self-fulfillment or self-actualization represents the highest level of human motivation, where an individual seeks to achieve personal growth, professional development, and realization of their potential. Offering an assignment to a subordinate to support their professional growth and future advancement aligns with this concept, as it helps the individual achieve a sense of self-fulfillment.
Reference: Maslow's Hierarchy of Needs Theory

According to IIA guidance, which of the following is true regarding typical fraud schemes?
* 1.A diversion occurs when an employee has an undisclosed personal economic interest in a transaction that adversely affects the organization
* 2. Tax evasion is intentional reporting of false or misleading information on a tax return by an organization to reduce taxes owed.
* 3. Skimming involves stealing cash or assets from the organization and is normally concealed by adjusting the organization??s records
* 4. Disbursement fraud occurs when a person causes the organization to issue a payment for fictitious goods or services

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

Correct Answer: D
✑ Diversion typically involves redirecting resources or assets for personal use, not just having an undisclosed interest.
✑ Tax evasion involves deliberate falsification of financial information to avoid tax liabilities.
✑ Skimming is taking cash before it is recorded in the accounting system, usually difficult to detect.
✑ Disbursement fraud involves creating fictitious invoices or vendors to divert funds.
: These definitions are aligned with common fraud schemes outlined in the ACFE (Association of Certified Fraud Examiners) Fraud Tree and various IIA practice guides.

According to IIA guidance, which of the following would be the best first step to manage risk when a third party is overseeing the organization??s network and data'?

1. A. Creating a comprehensive reporting system for vendors to demonstrate their ongoingdue diligence in network operations.
2. B. Drafting a strong contract that requires regular vendor control reports and a right-to-audit clause
3. C. Applying administrative privileges to ensure right-to-access controls are appropriate
4. D. Creating a standing cybersecurity committee to identify and manage risks related to data security.

Correct Answer: B
Managing Third-Party Risk: When a third party oversees the organization??s network and data, the primary concern is to manage and mitigate risks associated with outsourcing critical functions.
Strong Contract Provisions: Drafting a strong contract that includes specific provisions such as regular vendor control reports and a right-to-audit clause is essential. These provisions ensure that the organization maintains oversight and control over the third party??s activities.
IIA Standards: Standard 2201 – Planning Considerations requires that internal auditors consider the organization??s objectives and the means by which they are achieved, including the role of third parties.
Contract Management:
✑ Control Reports: Regular control reports from the vendor provide insights into their performance and compliance with agreed-upon standards.
✑ Right-to-Audit Clause: This clause allows the organization to periodically audit the third party to ensure compliance with contractual obligations and to assess the effectiveness of their control environment.
References:
✑ Ensuring that third-party vendors adhere to the same standards of risk management and control as the organization helps in mitigating risks related to data security and network management.

An organization has a mature control environment but limited internal audit resources. Given this scenario, on which of the following should the internal auditors focus their testing?

1. A. Detective compensating controls
2. B. Preventive compensating controls.
3. C. Detective key controls.
4. D. Preventive key controls

Correct Answer: D
When internal audit resources are limited, it is crucial to focus on the most critical aspects of the control environment. Preventive key controls are designed to prevent errors or irregularities from occurring, which are essential for maintaining a strong control environment. Given the mature control environment of the organization, prioritizing preventive key controls ensures that potential issues are addressed before they materialize, providing a proactive approach to risk management.
Reference: IIA Practice Guide "Assessing the Adequacy of Internal Controls"

While auditing an organization's credit approval process, an internal auditor learns that the organization has made a large loan to another auditors relative. Which course of action should the auditor take?

1. A. Proceed with the audit engagement, but do not include the relative's information.
2. B. Have the chief audit executive and management determine whether the auditor shouldcontinue with the audit engagement.
3. C. Disclose in the engagement final communication that the relative Is a customer
4. D. Immediately withdraw from the audit engagement

Correct Answer: B
✑ Identify the Conflict of Interest:The internal auditor learns about a large loan made to another auditor's relative, which represents a conflict of interest.
✑ Refer to Professional Standards:According to the Institute of Internal Auditors' (IIA) standards, an internal auditor must maintain objectivity and avoid conflicts of interest (IIA Standard 1100 – Independence and Objectivity).
✑ Escalate the Issue:The appropriate course of action is to escalate this matter to the chief audit executive (CAE) and management, as they are responsible for determining the impact of the conflict and the appropriate response.
✑ Decision Making:The CAE and management will assess whether the conflict of interest could impair the auditor's objectivity and decide whether the auditor should be removed from the engagement or if additional oversight is needed.
✑ Documentation:It is important to document the conflict and the decision-making process in the audit documentation for transparency and accountability.
References:
✑ The IIA??s International Standards for the Professional Practice of Internal Auditing, specifically Standard 1100 on Independence and Objectivity.