IQN QIA Exam : Qualified Internal Auditor

Internal auditors must exercise due care if they are to meet their responsibilities for fraud detection. Thus, the existence of certain conditions should raise red flags and arouse auditors' professional scepticism concerning possible fraud.
Which of the following is most likely to be considered an indication of possible fraud?

• A. An Internal Revenue Service audit of tax returns.
• B. A new management team installed as the result of a takeover.
• C. Rapid turnover of financial executives.
• D. Rapid expansion into new markets.

Which of the following areas are addressed by attribute standards?

• A. Independence, objectivity, and nature of the work
• B. Independence, objectivity and proficiency
• C. Independence, communication of findings, and the resolution of problems affecting the risks accepted by management
• D. Engagement planning, engagement execution, and progress monitoring

A Qualified Internal Auditor directs the audit function for a large city and is planning the audit schedule for the next year. The city has a number of different funds, some that are restricted in use by government grants and some that require compliance reports to the government. One of the programs for which the city has received a grant is job retraining and placement. The grantspecifies certain conditions a participant in the program must meet in order to be eligible for the funding.
The auditor must determine the applicable laws and regulations.
Which of the following procedures would be the least effective in learning about the applicable laws and regulations?

• A. Review applicable grant agreements.
• B. Review prior year working papers and enquire of officials as to changes.
• C. Make inquiries of the city's chief financial officer, legal counsel, or grant administrators.
• D. Discuss the matter with the audit committee and make inquiries as to the nature of the requirements and the audit committee's objectives for the audit.

When making a presentation to management, the auditor wants to report findings and to stimulate action.
These objectives are best accomplished by

• A. Handing out copies of the report, asking the participants to read the report, and asking for questions.
• B. Using slides/overheads to support a discussion of major points.
• C. Delivering a lecture on the findings.
• D. Showing a series of slides or overheads that graphically depict the findings; limit verbal commentary.

An internal auditor would trace copies of sales invoices to shipping documents in order to determine that:

• A. The subsidiary accounts receivable ledger was updated.
• B. Customer shipments were billed.
• C. Sales that are billed were also shipped.
• D. Shipments to customers were also recorded as receivables.