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NO.1 A chief audit executive (CAE) of an international charity reports functionally to the audit
committee of the board of directors and administratively to the charity's chief financial officer(CFO).
Which of the following would impair the internal audit function's independence?
A. The CFO manages the accounting of the budget for the internal audit function.
B. The CFO administers the annual evaluation process for the internal auditors.
C. The CFO determines the scope of internal audit work in the accounting department.
D. The CFO provides feedback on the CAE's audit reports.
Answer: C
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NO.2 In publicly held companies,management often requires the internal audit activity's involvement
with quarterly financial statements that are made public and used internally. Which of the following
is generally not a reason for such involvement?
A. Management may be concerned about its reputation in the financial markets.
B. The Standards state that internal auditors should be involved with reviewing quarterly financial
statements.
C. Management may perceive that having quarterly financial information examined by the internal
auditors enhances its value for internal decision making.
D. Management may be concerned about potential penalties that could occur if quarterly financial
statements are misstated.
Answer: B
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