Internal auditors can benefit from a strong relationship with the external auditors because external auditors can: A. Provide internal auditors with an independent and knowledgeable viewpoint.

B. Concur with the internal auditors' reports and thus improve the quality of assurance provided to management.

C. Increase the effectiveness of internal control sampling techniques.

D. Assist the internal auditor by providing information obtained from similar audits with other clients.

Company A has a formal comprehensive corporate code of ethics while company B does not. Which of the following statements regarding the existence of the code of ethics in company A can be logically inferred?

1.

Company A exhibits a higher standard of ethical behavior than does company B.

2.

Company A has established objective criteria by which an employee's actions can be evaluated.

3.

The absence of a formal corporate code of ethics in company B would prevent a successful audit of ethical behavior in that company.

A. 2 only

B. 3 only

C. 1 and 2 only

D. 2 and 3 only

Which of the following is the responsibility of an internal auditor?

1.

Assist operating management in implementing audit recommendations.

2.

Provide management with value-added analysis to improve operations.

3.

Become an advocate for changes to the internal audit activity charter.

4.

Disclose non-financial risks that may be identified during the course of an engagement.

A. 1 and 3 only

B. 2 and 4 only

C. 1, 2, and 4 only

D. 1, 2, 3, and 4

A manufacturing organization's multi-step sales and shipping process starts when the organization's headquarters receives the sales order. Headquarters then shares that data with the individual manufacturing facility that compiles the shipment. Finally, the individual manufacturing facility sends the shipments to the customer. Which method should the internal auditor use to document this process in a flowchart?

A. Trace the entire process, from the receipt of the sales order at headquarters to when the goods are shipped to the customer.

B. Request a copy of each individual manufacturing facility's flowcharts, speak with facility managers to confirm that they have been updated and then use the information in a flowchart.

C. Trace the entire process in reverse, beginning with the shipped goods and ending with the receipt of the sales order at headquarters.

D. Obtain information on how management sets sales prices, find documentation about how the organization approves the change of sales prices, and prepare an overview flowchart that links the sales price details.

During the course of an audit, an internal auditor discovers that a valuable employee in the research department has been patenting new developments in the employee's name that are unrelated to the basic business of the organization.

The organization does not have a policy addressing this specific issue, but does have a general policy that all important new discoveries by employees are the property of the organization. Division management views the employee's actions as extra incentive to retain the employee.

A decision to include the employee's action in the engagement final communication would be:

1.

A violation of the IIA Code of Ethics.

2.

A violation of the reporting requirements in the Standards.

3.

Justified and necessary, according to the IIA Code of Ethics and Standards.

A. 1 only

B. 2 only

C. 3 only

D. 1 and 2 only