Which of the following might alert an internal auditor to the possibility of fraud in a division?
1. The division is not scheduled for an external audit this year.
2. Sales have increased by 10 percent.
3. A significant portion of management's compensation is directly tied to reported net income of the division.

Which of the following scenarios exemplifies a potential internal control weakness?

Which of the following would best serve to deter unethical behavior and encourage internal auditors to be objective in their work?

To promote a positive image within an organization, a chief audit executive (CAE) adjusted the audit plan to focus on assurance engagements that highlighted potential costs to be saved. Negative observations were to be omitted from engagement final communications. Which action taken by the CAE would be considered a violation of the Standards?
I.The focus of the audit function was changed without modifying the audit charter or notifying the audit committee.
II.
Negative observations were omitted from the engagement final communications.
III.
Cost savings and recommendations were highlighted in the engagement final communications.

Which of the following statements is true regarding organizational culture and an audit of the control environment?