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IIA Internal Audit Practitioner Sample Questions (Q28-Q33):

NEW QUESTION # 28
An internal auditor wants to establish the reasonableness of the current period's total payroll costs for the finance department. She divides the actual monthly payroll cost by the number of employees to derive an average cost per employee. Which of the following comparisons to this average cost would be considered trend analysis?

A. Budgeted information of another organization in the same industry.
B. The mean of all actual salary amounts.
C. Similar data for the department from two prior periods.

Answer: C

Explanation:
Comprehensive and Detailed Step-by-Step Explanation:
* Trend Analysis: This involves comparing data across different periods to identify patterns, fluctuations, or anomalies. Comparing the current average cost per employee to prior periods' data is a clear example of trend analysis.

NEW QUESTION # 29
Which of the following describes an internal auditor's use of external benchmarking?

A. The auditor compares return on equity for a beverage company against its competitor to analyze profitability.
B. The auditor evaluates operating income margin between geographical areas within an organization to analyze its profitability.
C. The auditor calculates the net profit margin for a business segment to analyze the profitability.

Answer: A

Explanation:
Comprehensive and Detailed Step-by-Step Explanation:
* Reference to Benchmarking:
* External benchmarking involves comparing the organization's metrics with those of other entities, typically competitors or industry averages.
* Standard 1210 - Proficiency: Internal auditors must have knowledge to evaluate performance against external benchmarks effectively.
* Reasoning:
* Option Bdemonstrates external benchmarking by comparing the organization's return on equity with a competitor's performance.
* Option AandOption Cfocus on internal analysis within the organization and do not use external references.
* Application in Internal Auditing:
* External benchmarking identifies competitive gaps, informs strategic decisions, and supports recommendations for improvement.

NEW QUESTION # 30
The chief audit executive scheduled an exit meeting to discuss conclusions and recommendations with management before issuing the final engagement communication. Which of the following describes the primary reason that the exit meeting should be documented?

A. The information may be needed if a disagreement about the content arises
B. The Standards require that the internal auditor document exit meetings
C. The results of the discussion form part of the internal auditor's performance review

Answer: A

Explanation:
Comprehensive and Detailed Step-by-Step Explanation:
* Exit Meetings: The purpose of an exit meeting is to ensure that management understands and agrees (or documents any disagreements) with the audit findings, conclusions, and recommendations. Proper documentation ensures that there is a record of the discussion, which can be referred to later if disputes arise about the content.

NEW QUESTION # 31
Which of the following would have the most direct impact on management's decision regarding the amount of risk that is considered acceptable?

A. Risk capacity.
B. Risk appetite.
C. Risk perception.

Answer: B

Explanation:
Comprehensive and Detailed Step-by-Step Explanation:
* Reference to IIA Standards:
* Standard 2120 - Risk Management: Internal audit should evaluate the organization's risk appetite and alignment with decision-making processes.
* Definitions:
* Risk Appetite(Option B): The level of risk an organization is willing to accept in pursuit of its objectives, making it the most direct determinant of acceptable risk levels.
* Risk Capacity(Option A): The organization's ability to absorb risk, which is more strategic and long-term.
* Risk Perception(Option C): Subjective views of risk, which can influence decisions but do not directly determine acceptable risk.

NEW QUESTION # 32
Management requested that the chief audit executive (CAE) include an audit of the organization's health and safety program in next year's annual audit plan. However, the internal audit activity has no expertise in this area. Which of the following would be the most appropriate actions for the CAE?

A. Accept the request, provided management has conducted a thorough risk assessment prior to the engagement to help guide the audit.
B. With management's agreement, amend the audit scope so that specialized expertise is not needed.
C. Work with an internal subject matter expert to complete the audit.

Answer: C

Explanation:
Comprehensive and Detailed Step-by-Step Explanation:
* Reference to IIA Standards:
* Standard 1210 - Proficiency: The internal audit activity must possess or obtain the knowledge, skills, and competencies needed to perform its responsibilities effectively.
* If internal expertise is lacking, external resources or subject matter experts should be engaged.
* Reasoning:
* Option Ais correct because collaborating with an internal expert ensures that the audit is performed competently while addressing the health and safety risks comprehensively.
* Option B(amending the scope) avoids addressing critical risks, which may undermine the value of the audit.
* Option C(relying on management's risk assessment) is inappropriate, as the internal audit function must independently evaluate the area.
* Mitigating Lack of Expertise:
* Leveraging subject matter experts ensures compliance with professional standards and the integrity of the audit process.

NEW QUESTION # 33
......

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Ted Green Ted Green

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