Free Internal Audit Fundamentals Practice Questions

A.  

Wait for the next external assessment and address all of the missing information in the charter based on the recommendations from the external assessment team.

B.  

Perform a review of IIA guidance to become acquainted with the latest mandatory elements prior to updating the charter

C.  

Use an internal audit charter template from another organization that operates within the same industry.

D.  

Identify an individual within the internal audit activity who has in-depth knowledge of mandatory IIA guidance elements to address any gaps or areas of the current version of the charter that could be improved.

A.  

Communicating to internal audit staff instructions for completing engagements within shorter time periods.

B.  

Requesting additional funding from the board to train internal audit staff on time and resource management.

C.  

Implementing the use of agile auditing during engagements to meet expectations.

D.  

Encouraging internal audit staff to participate in workshops to further develop their understanding of the organization ' s strategies.

A.  

Cosourcing

B.  

Inbound rotation

C.  

Guest auditor

D.  

Outbound rotation

A.  

Offering a one-off donation to an environmental charity for its expansion efforts

B.  

Organizing organization volunteers to provide periodic plantation skill sharing to farmers

C.  

Providing special year-end monetary bonuses to the organization ' s employees at all levels

D.  

Arranging a free-of-charge picnic for all of the organization ' s employees and their family members

A.  

Effective communication skills

B.  

Risk-based assurance knowledge

C.  

Demonstration of due professional care.

D.  

Demonstration of ethical behavior

A.  

Requesting to be part of all engagements on the annual audit plan.

B.  

Attending a series of locally offered training courses.

C.  

Completing a skills assessment and development plan for targeted training needs,

D.  

Attending a webinar on how to use data analytics

A.  

Communicate specific activities appropriate to the performance of internal auditing

B.  

Promote ethical culture within corporations and other business organizations

C.  

Establish mandatory standards of competence for the practice of internal auditing

D.  

Establish principles and expectations governing behavior of individuals and organizations in the conduct of internal auditing

A.  

Asset misappropriation.

B.  

Bribery.

C.  

Falsifying records.

D.  

Skimming

A.  

As internal control is part of risk management, the internal audit role in risk management implies reduced emphasis on internal control.

B.  

Internal audit can blur the distinction between the second and the third lines as long as value is added.

C.  

Internal audit cannot rely on other assurance providers when opining on the effectiveness of risk management.

D.  

Internal audit should be aligned with first- and second-line functions through effective communication, cooperation, and collaboration.

A.  

Personnel and customer surveys, actual reports, and due diligence results regarding third-party governance practices.

B.  

Details on mandatory reporting to third parties, disclosure committee charter and responsibilities, and the internal communication system.

C.  

Succession plans, development programs, and job descriptions with responsibilities and authorities.

D.  

Ethics and integrity policy; structured interviews with employees; and established and communicated values, mission, and vision.

A.  

Segregate duties between code development and migrating changes into production.

B.  

Conduct fraud training for the IT team responsible for the ERP system.

C.  

Penalize the developer who committed the fraud by terminating employment.

D.  

Restrict developers ' access to the ERP system ' s test environment.

A.  

Reporting internal audit engagement findings to regulatory agencies.

B.  

Providing risk-based advice to the organization’s stakeholders.

C.  

Conducting accounting audit engagements as requested by the chief financial officer.

D.  

Designing and implementing new organizational policies.

A.  

We will request CEO approval for investments greater than S20 million and board approval for investments greater than $50 million.

B.  

We will hedge 95 percent of our U S. currency exposure and 100 percent of our European currency exposure.

C.  

We have a moderate tolerance for investment earnings volatility with a target value at risk of S50 million.

D.  

We will report to the risk committee all credit losses greater than S10 million and all market value losses greater than S20 million.

A.  

When an internal auditor releases required information to a regulator, resulting in a significant loss through fines and penalties for the organization, he fails to add value.

B.  

When an internal auditor limits the scope of the audit engagement after learning that management is hiding relevant information, he demonstrates integrity.

C.  

When an internal auditor disagrees with the treatment received by workers in the organization’s foreign subsidiary and alters the audit program to highlight the issue, the fails to demonstrate objectivity.

D.  

When an internal auditor continues with an audit engagement, despite the audit client’s claims that the work performed is unnecessary and redundant, he fails to demonstrate competency.

A.  

Factitious vendors are entered into the system, possibly resulting in improper disbursements.

B.  

Bad debt expense is intentionally omitted from the financial statements.

C.  

Certain costs are capitalized, rather than expensed.

D.  

A related party receives benefits not appropriate in an arm ' s-length transaction.

A.  

An internal audit function directed towards performing primarily operational activities becomes more effective in providing management with an objective opinion on the design of risk management and governance processes.

B.  

An internal audit function is effectively managed when the results of its work achieve the purpose and responsibility included in its audit charter.

C.  

The size of the internal audit function, as well as the complexity of its work, determines whether the chief audit executive should create policies and procedures to effectively manage the internal audit function.

D.  

When an external service provider serves as the internal audit function, the provider assumes responsibility for maintaining an effective internal audit function.

A.  

Coordinate and facilitate risk workshops for management to attend.

B.  

Establish the degree of risk appetite for management to accept.

C.  

Set risk indicators and mitigation plans for management to implement

D.  

Determine the number of significant risks for management to report to the board.

A.  

The board should ask the internal audit activity to perform additional assurance engagements.

B.  

A comprehensive fraud risk assessment and management program should be carried out.

C.  

The organization should conduct training sessions on fraud, which should be attended by senior management and staff.

D.  

Anti-fraud and whistleblowing policies should be implemented and their importance should be clearly stated.

A.  

Avoidance.

B.  

Acceptance.

C.  

Reduction.

D.  

Sharing.

A.  

Assessing soft controls are an effective method of assessing risk related to personnel.

B.  

Assessing soft controls, as opposed to hard controls, makes it easier to evaluate operating effectiveness.

C.  

Assessing soft controls can help internal auditors in undertaking root-cause analysis.

D.  

Assessing soft controls provides more objective information than assessing hard controls.