ACCA CIA Challenge Exam
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A former line supervisor from the Financial Services Department has completed six months of a two-year development opportunity with the internal audit activity (IAA). She is assigned to a team that will audit the organization's payroll function, which is managed by the Human Resources Department. Which of the following statements is most relevant regarding her independence and objectivity with respect to the payroll audit?
Which of the following are generally recognized as essential elements of a corporate social responsibility program?
When auditing the award of a major contract, which of the following should an internal auditor suspect as a red flag for a bidding fraud scheme?
1. Subsequent change orders increase requirements for low-bid items.
2. Material contract requirements are different on the actual contract than on the request for bids.
3. A high percentage of employees are charged to indirect accounts.
4. Losing bidders are hired as subcontractors.
Which of the following describes a key characteristic related to effective organizational communication?
An internal auditor wants to sample data to test an audit theory in a cost-effective way. Which of the following sampling strategies should she use?
A furniture manufacturer has installed a new fire sprinkler system at its central warehouse and canceled the existing fire insurance policy on that property. What change of risk response strategy does this course of action most likely reflect?
According to IIA guidance, which of the following should be formally documented in the internal audit charter?
With regard To IT governance, which of the following is the most effective and appropriate role for the internal audit activity?
Which of the following scenarios best illustrates the principle of due professional care?
While auditing an organization's credit approval process, an internal auditor learns that the organization has made a large loan to another auditor's relative. Which course of action should the auditor take?
An internal auditor is evaluating techniques management uses to mitigate risks within a particular product division. Which of the following is an example of risk reduction?
Which of the following is most likely to enhance an internal auditor's objectivity?
A headquarters-based internal auditor has been sent to a major overseas subsidiary to conduct various engagements. Initially, the internal auditor spends time to become familiar with local customs and organization's practices while embarking on the first engagement. Which of the following competencies does the internal auditor exercise?
Click the Exhibit.
Internal auditors are asked to keep track of how many hours per day they spend planning the audit, conducting the engagement, and writing the audit report. The data for two days has been collected as follows:
Day 1
Day 2
Planning the audit
2 hours
3 hours
Conducting the engagement
1 hour
1 hour
Writing the audit report
2 hours
4 hours
Which of the following graphs depicts the data accurately?
A large sales organization maintains a system of internal control according to the COSO model and has updated its code of conduct. This change relates to which component of the COSO framework?
An internal auditor is performing analytical reviews as part of an audit of a supermarket's merchandising department. Because the economy has declined since midyear, the auditor can expect to encounter which of the following?
According to IIA guidance, which of the following statements is true when an internal auditor performs consulting services that improve an organization's operations?
Which of the following is most likely to function as a directive control?
Which of the following best describes the misdirection of payments on accounts receivable to an employee's bank account?
In which of the following scenarios would the chief audit executive (CAE) be required to decline the assignment?
According to The MA Code of Ethics, which of the following is one of the rules of conduct for objectivity?
According to IIA guidance, which of the following is ultimately responsible for seeing that the internal control system of an organization's social responsibility program is effective?
While preparing for an audit of senior management expenses, the chief audit executive (CAE) learns that management is unable to locate a number of original expense claims to support the related disbursements. She decides to defer the engagement until they can be located. Which of the following principles likely guided the CAE's decision?
Which of the following offers the best evidence that the internal audit activity has achieved organizational independence?
Which of the following options is the most cost-effective and efficient way for internal auditors to keep current with the latest developments in the internal audit profession?
According to IIA guidance, which of the following is not a responsibility of the chief audit executive pertaining to documenting information to support internal audit engagement results and conclusions?
When forming an opinion on the adequacy of management's systems of internal control, which of the following findings would provide the most reliable assurance to the chief audit executive?
• During an audit of the hiring process in a law firm, it was discovered that potential employees' credentials were not always confirmed sufficiently. This process remained unchanged at the following audit.
• During an audit of the accounts payable department, auditors calculated that two percent of accounts were paid past due. This condition persisted at a follow up audit.
• During an audit of the vehicle fleet of a rental agency, it was determined that at any given time, eight percent of the vehicles were not operational. During the next audit, this figure had increased.
• During an audit of the cash handling process in a casino, internal audit discovered control deficiencies in the transfer process between the slot machines and the cash counting area. It was corrected immediately.
Which of the following behaviors could represent a significant ethical risk if exhibited by an organization's board?
1. Intervening during an audit involving ethical wrongdoing.
2. Discussing periodic reports of ethical breaches.
3. Authorizing an investigation of an unsafe product.
4. Negotiating a settlement of an employee claim for personal damages.
Which of the following actions are appropriate for the chief audit executive to perform when identifying audit resource requirements?
1. Consider employees from other operational areas as audit resources, to provide additional audit coverage in the organization.
2. Approach an external service provider to conduct internal audits on certain areas of the organization, due to a lack of skills in the organization.
3. Suggest to the audit committee that an audit of technology be deferred until staff can be trained, due to limited IT audit skills among the audit staff.
4. Communicate to senior management a summary report on the status and adequacy of audit resources.
According to IIA guidance, which of the following individuals should receive the final audit report on a compliance engagement for the organization's cash disbursements process?
According to IIA guidance, which of the following are appropriate actions for the chief audit executive regarding management's response to audit recommendations?
During a fraud interview, it was discovered that unquestioned authority enabled a vice president to steal funds from the organization. Which of the following best describes this condition?
According to IIA guidance, which of the following strategies would add the least value to the achievement of the internal audit activity's (IAA's) objectives?
An internal auditor determines that certain information from the engagement results is not appropriate for disclosure to all report recipients because it is privileged. In this situation, which of the following actions would be most appropriate?
According to IIA guidance, which of the following statements is false regarding a review of the controls in place to prevent fraud?
A code of business conduct should include which of the following to increase its deterrent effect?
1. Appropriate descriptions of penalties for misconduct.
2. A notification that code of conduct violations may lead to criminal prosecution.
3. A description of violations that injure the interests of the employer.
4. A list of employees covered by the code of conduct.
Which of the following components should be included in an audit finding?
1. The scope of the audit.
2. The standard(s) used by the auditor to make the evaluation.
3. The engagement's objectives.
4. The factual evidence that the internal auditor found in the course of the examination.
According to IIA guidance, organizations have the most influence on which element of fraud?
A newly promoted chief audit executive (CAE) is faced with a backlog of assurance engagement reports to review for approval. In an attempt to attach a priority for this review, the CAE scans the opinion statement on each report. According to IIA guidance, which of the following opinions would receive the lowest review priority?
1. Graded positive opinion.
2. Negative assurance opinion.
3. Limited assurance opinion.
4. Third-party opinion.
Which of the following statements is false regarding roles and responsibilities pertaining to risk management and control?
A chief audit executive is preparing interview questions for the upcoming recruitment of a senior internal auditor. According to IIA guidance, which of the following attributes shows a candidate's ability to probe further when reviewing incidents that have the appearance of misbehavior?
Which of the following best describes the four components of a balanced scorecard?
According to IIA guidance, which of the following are the most important objectives for helping to ensure the appropriate completion of an engagement?
1. Coordinate audit team members to ensure the efficient execution of all engagement procedures.
2. Confirm engagement workpapers properly support the observations, recommendations, and conclusions.
3. Provide structured learning opportunities for engagement auditors when possible.
4. Ensure engagement objectives are reviewed for satisfactory achievement and are documented properly.
Which of the following should be included in a privacy audit engagement?
1. Assess the appropriateness of the information gathered.
2. Review the methods used to collect information.
3. Consider whether the information collected is in compliance with applicable laws.
4. Determine how the information is stored.
According to IIA guidance, which of the following is least likely to be a key financial control in an organization's accounts payable process?
Which of the following is least likely to help ensure that risk is considered in a work program?
An audit identified a number of weaknesses in the configuration of a critical client/server system. Although some of the weaknesses were corrected prior to the issuance of the audit report, correction of the rest will require between 6 and 18 months for completion. Consequently, management has developed a detailed action plan, with anticipated completion dates, for addressing the weaknesses. What is the most appropriate course of action for the chief audit executive to take?
A draft internal audit report that cites deficient conditions generally should be reviewed with which of the following groups?
1. The client manager and her superior.
2. Anyone who may object to the report’s validity.
3. Anyone required to take action.
4. The same individuals who receive the final report.
A large retail organization, which sells most of its products online, experiences a computer hacking incident. The chief IT officer immediately investigates the incident and concludes that the attempt was not successful. The chief audit executive (CAE) learns of the attack in a casual conversation with an IT auditor. Which of the following actions should the CAE take?
1. Meet with the chief IT officer to discuss the report and control improvements that will be implemented as a result of the security breach, if any.
2. Immediately inform the chair of the audit committee of the security breach, because thus far only the chief IT officer is aware of the incident.
3. Meet with the IT auditor to develop an appropriate audit program to review the organization's Internet-based sales process and key controls.
4. Include the incident in the next quarterly report to the audit committee.
According to IIA guidance, which of the following is true when the internal audit activity is asked to investigate potential ethics violations in a foreign subsidiary?
According to IIA guidance, which of the following statements is true regarding the authority of the chief audit executive (CAE) to release previous audit reports to outside parties?
The chief audit executive of a medium-sized financial institution is evaluating the staffing model of the internal audit activity (IAA). According to IIA guidance, which of the following are the most appropriate strategies to maximize the value of the current IAA resources?
• The annual audit plan should include audits that are consistent with the skills of the IA
A.
• Audits of high-risk areas of the organization should be conducted by internal audit staff.
• External resources may be hired to provide subject-matter expertise but should be supervised.
• Auditors should develop their skills by being assigned to complex audits for learning opportunities.
According to IIA guidance, which of the following is true regarding the exit conference for an internal audit engagement?
Which of the following is the most important concept to be included in a consulting engagement agreement?
Which of the following has the greatest effect on the efficiency of an audit?
A multinational organization has multiple divisions that sell their products internally to other divisions. When selling internally, which of the following transfer prices would lead to the best decisions for the organization?
Which of the following statements regarding database management systems is not correct?
The critical path for any project is the path that exhibits which of the following characteristics?
Providing knowledge, motivating organizational members, controlling and coordinating individual efforts, and expressing feelings and emotions are all functions of:
Which of the following is the primary benefit of including end users in the system development process?
According to Porter's model of competitive strategy, which of the following is a generic strategy?
1. Differentiation.
2. Competitive advantage.
3. Focused differentiation.
4. Cost focus.
Which of the following are typical audit considerations for a review of authentication?
1. Authentication policies and evaluation of controls transactions.
2. Management of passwords, independent reconciliation, and audit trail.
3. Control self-assessment tools used by management.
4. Independent verification of data integrity and accuracy.
An internal auditor discovered that several unauthorized modifications were made to the production version of an organization's accounting application. Which of the following best describes this deficiency?
Which of the following describes the free trade zone in an e-commerce environment?
Which of the following is a primary objective of the theory of constraints?
Which of the following engagement observations would provide the least motivation for management to amend or replace an existing cost accounting system?
When an organization is choosing a new external auditor, which of the following is the most appropriate role for the chief audit executive to undertake?
Which of the following is always true regarding the use of encryption algorithms based on public key infrastructure (PKI)?
Import quotas that limit the quantities of goods that a domestic subsidiary can buy from its foreign parent company represent which type of barrier to the parent company?
An organization's account for office supplies on hand had a balance of S9,000 at the end of year one. During year two. the organization recorded an expense of $45,000 for purchasing office supplies. At the end of year two. a physical count determined that the organization has $11,500 in office supplies on hand. Based on this information, what would be recorded in the adjusting entry at the end of year two?
The most important reason to use risk assessment in audit planning is to:
What kind of strategy would be most effective for an organization to adopt in order to implement a unique advertising campaign for selling identical product lines across all of its markets?
Which of the following actions is most likely to gain support for process change?
Which of the following control features consists of a set of authorization codes that distinguishes among actions such as reading, adding, and deleting records?
When writing a business memorandum, the writer should choose a writing style that achieves all of the following except:
Which of the following factors is most responsible for the increasing risk that unauthorized parties may obtain or tamper with personal data?
Which of the following describes the most appropriate set of tests for auditing a workstation's logical access controls?
According to IIA guidance, which of the following corporate social responsibility (CSR) activities is appropriate for the internal audit activity to perform?
During the last year, an organization had an opening inventory of $300,000, purchases of $980,000, sales of $1,850,000, and a gross margin of 40 percent. What is the closing inventory if the periodic inventory system is used?
TESTED 14 May 2024
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