During an accounts payable audit engagement, the internal auditor found that vendor invoices are always paid
30 days after the invoice date, regardless of the vendor's payment terms. The auditor also discovered that accounts payable employees are not comparing vendor invoices received to previous vendor invoices prior to payment. Based on the auditor's observations, what are the potential risks?

• A. Poor cash management due to potentially paying the wrong vendors
• B. Poor cash management due to potentially paying fraudulent invoices
• C. Poor cash management due to potentially lost payment discounts

Which of the following conditions would threaten an internal auditor's objectivity?

• A. Using knowledge that the internal auditor gained in his previous position to update systems and controls descriptions.
• B. Providing assurance services over the activity where the internal auditor was employed 10 months prior.
• C. Providing consulting services over the activity where the internal auditor was employed two years prior.

During a travel expense audit engagement, the internal auditor discovered that the accounts payable staff spend a significant amount of time previewing expense reports before the reports are sent to managers for review and approval. The total of all expense reports during a year represents less than 1% of the organization' s total budget. Which of the following best supports the auditor'srecommendation to reduce the level of reviews?

• A. The duplication of effort in the review process is unnecessary.
• B. The inherent risk of travel expense fraud is low.
• C. The cost of the control outweighs the benefit.

A senior internal auditor is using a risk and control matrix to facilitate an internal control assessment of the fixed asset accounting process. Which of the following activities would aid the auditor in determining inputs for the risk and control matrix?

• A. Interviews with fixed asset management, control process walkthroughs, and internal control questionnaires.
• B. Management's cost-benefit analysis of internal control alternatives considered in the design of the fixed asset accounting process.
• C. Reviewing the results of control effectiveness testing of the fixed asset capitalization subprocess.

Which of the following best describes a compliance audit engagement?

• A. The auditor analyzes the economic activity of the organization as measured and reported using international accounting standards.
• B. The auditor reviews controls of the oil shale mining process to assess adherence to safetyregulations established by local authorities.
• C. The auditor conducts a review to provide assurance that the external service provider of maintenance for the organization has an effective risk management process.