According to IIA guidance, which of the following are macro-level audit activities performed for an assurance engagement of the purchasing department?
* 1. Obtain and review all purchasing-related audit reports issued within the past year.
* 2. Meet with the quality assurance group to discuss its previous reports of any purchasing-related findings.
* 3. Review a memo written by the purchasing manager that outlines ongoing problems with the purchasing
software.
* 4. Request a copy of the report from a purchasing audit conducted last year by an external service provider.

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

Correct Answer: A

Which of the following techniques would provide the most compelling evidence that a safety hazard exists within a manufacturing facility?

1. A. Observation of the facility during operations.
2. B. Questioning of facility management, including the facility safety officer.
3. C. Analysis of facility operating reports, focusing on instances when breakdowns occurred.
4. D. Review of records involving safety violations, filed by facility production employees.

Correct Answer: A

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?

1. A. From sharing to reduction.
2. B. From acceptance to reduction.
3. C. From sharing to avoidance.
4. D. From acceptance to avoidance.

Correct Answer: A

Which of the following scenarios best illustrates a rationalization as the root cause of potential fraud?

1. A. Managers who have been with the organization for several decades become aware that newly hired, younger managers are being moved more quickly into senior positions.
2. B. The controller at a nationwide manufacturing company recently opted to no longer require two-week mandatory vacations for accounting staff.
3. C. Security cameras that monitor cash handling at the register are not functioning.
4. D. The organization is slowly phasing out three mature products that produce the highest commissions for the sales staff.

Correct Answer: B

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

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

Correct Answer: D