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IIA-CIA-Part1 Practice Questions

Internal Audit Fundamentals

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Question # 136

According to NA guidance which of the following should be documented in the internal audit chatter?

Options:

A.  

The risk assessment process applied by the internal audit activity

B.  

The organization ' s internal control framework used by the internal audit activity

C.  

The nature of consulting services provided by the internal audit activity

D.  

The performance evaluation process used by the internal audit activity

Discussion 0
Question # 137

In an assurance engagement focused on the adequacy of organizationwide risk management practices, which of the following best describes a primary area of interest for the engagement?

Options:

A.  

The effectiveness of process-level and transaction-level controls.

B.  

Conflicts of interest within the organizational structure of the senior management.

C.  

The alignment of management decisions with the level of risk the organization is willing to accept.

D.  

The actions of upper management in response to the internal audit activity ' s reporting

Discussion 0
Question # 138

A chief audit executive ensures that the internal audit activity provides annual training to management on internal controls. Where is the nature of these services defined?

Options:

A.  

The annual audit plan.

B.  

The audit report.

C.  

The annual risk assessment.

D.  

The audit charter.

Discussion 0
Question # 139

After the draft engagement report is issued, the manager of the area that was reviewed is informally interviewed by the engagement supervisor regarding the audit experience. Which of the following is most likely the purpose for this interview?

Options:

A.  

Such an interview is performed when there is a need to dismiss an internal auditor

B.  

Feedback from the manager will contribute to the audit team ' s professional development

C.  

The manager ' s opinion will be used to form the final audit assessment and report rating.

D.  

The manager will provide insights into the audited industry ' s trends

Discussion 0
Question # 140

An organization is in the process of hiring a new chief audit executive (CAE). Which of the following can the potential candidates expect to be a part of the recruiting process or in place when the CAE is hired?

Options:

A.  

There are checks to determine the existence of any potential conflict of interest.

B.  

The CAE reports functionally to the highest level of management, the CEO.

C.  

The CAE’s compensation depends on the performance of the organizational departments.

D.  

Hiring and termination of the CAE is dependent on the decision of senior executives.

Discussion 0
Question # 141

Which of the following situations undermines the independence of the internal audit activity?

Options:

A.  

The internal audit activity is responsible for the company ' s risk management function and its head manager reports to the chief audit executive

B.  

A senior member of the internal audit activity once worked in the corporate finance department

C.  

The organization ' s CEO reviews the internal audit activity ' s annual budget per the organization’s policies and procedures

D.  

The internal audit activity often uses management ' s risk profile to build its own risk profile for annual planning

Discussion 0
Question # 142

An internal auditor was offered expensive tickets to a sporting event by the manager of an area that she was currently auditing. The auditor politely declined. Which of the following fundamental principles of the MA Code of Ethics did she display?

Options:

A.  

Confidentiality.

B.  

Independence.

C.  

Competency.

D.  

Objectivity

Discussion 0
Question # 143

Why is it imperative for the chief audit executive to track and develop the educational qualifications of internal audit staff?

Options:

A.  

To accurately conduct performance appraisals

B.  

To ensure that staff complete required continuing professional education credits annually.

C.  

To ensure that the resources needed to complete the audit plan are available.

D.  

To satisfy the audit committee requirements.

Discussion 0
Question # 144

A chief audit executive (CAE) was asked by senior management to establish and manage a risk management function. A new chief risk officer was hired a year later to assume these responsibilities. As this function was included in the current annual audit plan, the CAE engaged an external resource for a risk management engagement. Which of the following potential threats to objectivity was the CAE likely addressing?

Options:

A.  

Self-review threat.

B.  

Advocacy threat.

C.  

Familiarity threat.

D.  

Personal relationship threat.

Discussion 0
Question # 145

When an organization purchases a derivative contract in the stock market to limit the potential loss in the value of a security, the organization is applying which of the following risk management techniques?

Options:

A.  

Avoiding the risk altogether.

B.  

Transferring the risk.

C.  

Introducing a control feature.

D.  

Accepting the risk.

Discussion 0
Question # 146

Of all the common characteristics of frauds, which of the following can the organization influence the most?

Options:

A.  

Pressure or incentive.

B.  

Rationalization

C.  

Opportunity

D.  

Commitment.

Discussion 0
Question # 147

Once an organization ' s risks are identified, what would be the next step to ensure resources are properly allocated to manage those risks?

Options:

A.  

Risk responses must be selected.

B.  

Risks must be assessed.

C.  

The risk universe must be established.

D.  

Risk responses must be aligned.

Discussion 0
Question # 148

Which level of corporate social responsibility does whistleblowing in companies primarily support?

Options:

A.  

Ethical responsibility.

B.  

Economic responsibility.

C.  

Legal responsibility.

D.  

Discretionary responsibility.

Discussion 0
Question # 149

The internal audit activity completed its analysis of sample transactions to determine occurrences of double billings According to If A guidance, which of the following best demonstrates that internal auditors exercised due professional care during the review?

Options:

A.  

Internal auditors found no instances of double billing and concluded there were no significant risks in this area.

B.  

Internal auditors documented the scope and methodology of the data testing.

C.  

Internal auditors discussed with management how data is safeguarded.

D.  

Internal auditors received formal performance feedback from the engagement supervisor.

Discussion 0
Question # 150

Which of the following best describes the board’s role in establishing effective organizational governance?

Options:

A.  

The board is involved in approving operational policy

B.  

The board monitors key processes and procedures

C.  

The board has oversight responsibility for organizational resources

D.  

The board approves management ' s detailed plans and objectives

Discussion 0
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