Which of the following statements best demonstrates application of due professional care during an assurance engagement?

1. A. The engagement detected irregularities and noncompliance instances.
2. B. The engagement supervisor had no significant comments in the supervisory review.
3. C. The audit procedures were systematically planned: executed, and documented.
4. D. The engagement objectives were designed to assist the engagement client

Correct Answer: C
✑ Introduction:
✑ Application of Due Professional Care:
✑ Options Analysis:
✑ Conclusion:
:
Internal Audit Standards and Practice Guides

An internal auditor discovered fraud while performing an audit of an organization's procurement process. Which of the following describes the greatest benefit of using forensic auditing techniques in this scenario?

1. A. Enhanced capability to prevent frauds from occurring.
2. B. Greater assurance that procurement frauds will be detected in a timely manner
3. C. Improved capability of evaluating fraud risks within the organization.
4. D. Greater understanding of fraud through better evidence collection

Correct Answer: D
Forensic auditing techniques provide a systematic approach to collecting and analyzing evidence related to fraud. The primary benefit of these techniques is the enhanced ability to gather comprehensive and detailed evidence, which leads to a greater understanding of how the fraud occurred and who was involved. This detailed evidence collection supports legal proceedings and helps in identifying control weaknesses that need to be addressed to prevent future frauds.
References:
✑ "Forensic Auditing: Principles and Practices," which outlines the importance of evidence collection in understanding and combating fraud.

A chief audit executive (CAE) following up on action plans from previously completed audits identifies that management has determined that certain action plans are no longer necessary If the CAE disagrees with managements decision, which of the following is the most appropriate next step for the CAE to take?

1. A. The CAE must discuss the matter with senior management
2. B. The CAE must discuss the matter with key shareholders.
3. C. The CAE must discuss the matter with legal counsel.
4. D. The CAE must discuss the matter with the board

Correct Answer: D
✑ Introduction:
✑ Escalation Process:
✑ Options Analysis:
✑ Conclusion:
:
Internal Audit Standards and Practice Guides .

Which of the following is essential for ensuring that the internal audit activity??s findings and recommendations receive adequate consideration?

1. A. Reporting results of audits with recommendations to management.
2. B. Providing formal follow-up procedures to ensure that management complies with an action plan or accepted risk of not taking action.
3. C. Reporting quarterly to management that the audit plan is focused on higher exposures of risk.
4. D. Discussing audit findings with independent auditors.

Correct Answer: B
✑ Ensuring Compliance:To ensure that audit findings and recommendations are addressed, formal follow-up procedures are necessary.
✑ Follow-up Procedures:These procedures involve tracking the implementation of recommendations and verifying that management has taken appropriate action or has accepted the risks of not acting.
✑ Reporting to Management:Regular reporting on the status of follow-up actions helps maintain accountability and transparency.
✑ Standard Requirement:This aligns with the IIA??s Standard 2500 – Monitoring Progress, which requires internal audit activities to establish and maintain a system to monitor the disposition of results communicated to management.
References:
✑ The IIA??s International Standards for the Professional Practice of Internal Auditing, specifically Standard 2500 on Monitoring Progress.

When using cost-volume-profit analysis, which of the following will increase operating income once the break-even point has been reached?

1. A. Fixed costs per unit for each additional unit sold.
2. B. Variable costs per unit for each additional unit sold.
3. C. Contribution margin per unit for each additional unit sold.
4. D. Gross margin per unit for each additional unit sold

Correct Answer: C
Contribution Margin: Contribution margin is the amount by which the sales price of a product exceeds its variable costs. After reaching the break-even point, each additional unit sold contributes directly to operating income.
: Cost-volume-profit (CVP) analysis, which highlights the role of contribution margin in
determining profitability.
Operating Income: At the break-even point, fixed costs are covered, so additional units sold increase operating income by the contribution margin per unit.
Fixed Costs: Fixed costs per unit (option A) do not change with additional units sold.
Variable Costs: Variable costs per unit (option B) remain constant and are deducted from sales price to calculate contribution margin.
Gross Margin: Gross margin per unit (option D) includes fixed costs and is less directly relevant than the contribution margin.