Which of the following best demonstrates the authority of the internal audit activity?

1. A. Suggesting alternatives to decision makers.
2. B. Improving the integrity of information.
3. C. Determining the scope of internal audit services.
4. D. Achieving engagement objectives.

Correct Answer: C

A medical insurance provider uses an electronic claims-submission process and suspects that a number of physicians have submitted claims for treatments that were not performed. Which of the following control procedures would be most effective to detect this type of fraud?

1. A. Require the physician to submit a signed statement attesting that the treatments had been performed.
2. B. Send confirmations to the physicians, requesting them to verify the exact nature of the claims submitted to the insurance provider.
3. C. Develop an integrated test facility and submit false claims to verify that the system is detecting such claims on a consistent basis.
4. D. Use computer software to identify abnormal claims based on the insured's age and medical history.

Correct Answer: D

Which of the following control activities is the most effective to ensure users' levels of access are appropriate for their current roles?

1. A. The human resources department generates a monthly list of terminated and transferred employees and requests IT to update the user access as required.
2. B. Standardized user access profiles are developed and the appropriate access profiles are automatically assigned to new or transferred employees.
3. C. System administrator rights are assigned to one user in each department who can update user access of terminated or transferred employees immediately.
4. D. Department managers are required to perform periodic user access reviews of relevant systems and applications.

Correct Answer: D

Faced with a complex, highly technical construction audit engagement, the chief audit executive (CAE) considered complementing the current internal audit resources by engaging the services of a civil engineer.
Which of the following should the CAE consider in determining whether the engineer possesses the necessary skills to perform the engagement?
* 1. Professional certification, license, or other recognition of the engineer's competence in the relevant discipline.
* 2. Experience of the engineer in the type of work being considered.
* 3. Compensation or other incentives that the engineer may receive.
* 4. The extent of other ongoing services that the engineer may be performing for the organization.

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

Correct Answer: D

An organization is facing a financial downturn and needs to impose major budget reductions to all departments. According to MA guidance, which of the following actions is most appropriate for the board to take to evaluate the potential impact on the internal audit activity?

1. A. Ask management to determine which internal audit engagements are lower risk and could be considered for removal from the annual audit plan.
2. B. Ask appropriate stakeholders for their opinion on the potential impacts of reducing the scope of the internal audit plan.
3. C. Ask the chief audit executive to determine whether budgetary limitations impede the ability of the internal audit activity to execute its responsibilities.
4. D. Ask The human resources department to determine how the annual compensation and salary of the audit staff could be adjusted to achieve savings.

Correct Answer: C