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NEW QUESTION 39
A manufacturing organization is considering a merger with a similar firm, and requests that the chief audit executive (CAE) perform a due diligence audit. During the preliminary survey, the CAE notes that inventory management is a high risk area. In consultation with the external auditors and legal advisors, the CAE learns that they share those concerns. Which of the following is the CAE’s best course of action?
- A. Advise management that internal audit, external audit, and legal advisors all have concerns about inventory management and, given the high materiality of inventory, management should not proceed with the merger.
- B. Coordinate with the merging firm’s internal audit department to better understand the inventory management function and whether the concerns are well-founded.
- C. Perform an independent audit of the merging firm’s inventory management practices to verify the concerns and to provide relevant and reliable results to management for their consideration and action.
- D. Coordinate a review of inventory management with external auditors and legal advisors and ensure each group focuses on their area of expertise to ascertain the extent of the problems, if any.
Answer: D
NEW QUESTION 40
Which of the following is an appropriate role for the internal audit activity with regard to the organization’s risk management program?
- A. Attain an adequate understanding of the organization’s key risk mitigation strategies.
- B. Identify and ensure that appropriate controls exist to mitigate risks.
- C. Identify and manage risks in line with the organization’s risk appetite.
- D. Ensure that a proper and effective risk management process exists.
Answer: A
Explanation:
Section: Volume E
NEW QUESTION 41
According to the Standards, which of the following best describes the responsibility of the chief audit executive (CAE) for approving the final engagement report?
* The CAE is responsible for obtaining management approval before issuing the final report.
* The CAE has overall responsibility for the report but can delegate the review and approval of the report.
* The CAE is responsible for obtaining senior management’s approval before releasing the final report.
* The CAE is responsible for approving to whom and how the final report will be disseminated.
- A. 1 and 3 only
- B. 2 and 4 only
- C. 2 and 3 only
- D. 1 and 4 only
Answer: B
Explanation:
Section: Volume D
NEW QUESTION 42
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