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NEW QUESTION 48
A chief audit executive (CAE) of a major retailer has engaged an independent firm of information security specialists to perform specialized internal audit activities. The CAE can rely on the specialists' work only if it is:
- A. Carried out in accordance with the Standards.
- B. Performed in accordance with the terms of the contract.
- C. Carried out using standard review procedures for retailers.
- D. Performed under the supervision of the information technology department.
Answer: A
Explanation:
Section: Volume B
NEW QUESTION 49
During an audit of a contract for computer security, a governmental auditor finds that a contractor has developed a system that could be the most advanced in the industry. If it seems that the contractor is charging the government for developmental cost of a system that might be sold to other organizations, what is the auditor's best course of action?
- A. Compare the cost of the security program with previous costs incurred by governmental operations and inform the contractor that the difference will be a disallowed cost.
- B. Estimate the cost to develop the advanced security system and inform the contractor that it will be a disallowed cost.
- C. Exclude the observation from the engagement final communication because the contract was vague and the level of security is clearly acceptable.
- D. Estimate the added cost, report it to management, and suggest that management meet with its lawyers and the contractor to resolve differences.
Answer: D
NEW QUESTION 50
Which of the following is not an outcome of control self-assessment?
- A. Internal auditors become involved in and knowledgeable about the self-assessment process.
- B. Nonaudit employees become experienced in assessing controls and associating control processes with managing risks.
- C. Informal, soft controls are omitted, and greater focus is placed on hard controls.
- D. The entire objectives-risks-controls infrastructure of an organization is subject to greater monitoring and continuous improvement.
Answer: C
Explanation:
Section: Volume E
NEW QUESTION 51
Which of the following is a red flag associated with improper asset valuation?
- A. Unusual increase in gross margin.
- B. Recurring positive cash flows from operations.
- C. Unusual decrease in the number of days' purchases in inventory.
- D. Allowance for bad debts that is increasing in percentage terms.
Answer: A
Explanation:
Topic 3, Volume C
NEW QUESTION 52
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