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IIA-CIA-Part1 Practice Questions

Internal Audit Fundamentals

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Question # 76

Which of the following scenarios best illustrates due professional care?

Options:

A.  

An internal auditor who previously worked in the payroll department within the last year was intentionally excluded by the chief audit executive from the audit team assigned to a payroll audit

B.  

While performing a payroll audit an auditor became skeptical about significant payments made to a manager. The auditor sought to determine whether these payments were reasonable through discussion with a manager in a different department in the organization

C.  

The head of the payroll department being audited is a business partner of the engagement supervisor During the audit the engagement supervisor sought to maintain his objectivity by not participating in fieldwork

D.  

An auditor assigned to a payroll audit was unable to reperform some complex payroll computations for a small number of employees The sum of these payments was below the materiality thresholds provided so the auditor did not perform further tests

Discussion 0
Question # 77

Senior management purchased surveillance cameras and installed them over a door that provides entry to an area where according to a recent internal audit report, hazardous materials exist and there is a high risk of explosion Which type of control was implemented in this situation?

Options:

A.  

A corrective control

B.  

A detective control

C.  

A preventive control

D.  

A directive control

Discussion 0
Question # 78

Which of the following controls would be most useful to prevent an employee from using the organization ' s funds for inappropriate expenditures and falsifying financial records to conceal the fraud?

Options:

A.  

Segregating duties in the payroll processes.

B.  

Confirming receipt of goods or services.

C.  

Performing background checks on newly hired employees.

D.  

Requiring management approval for expenses.

Discussion 0
Question # 79

The internal auditor obtained large volumes of transaction history data for accounts on which he suspected that some fraudulent transactions occurred. Which of the following actions best demonstrates due professional care by the internal auditor?

Options:

A.  

The internal auditor carefully scrutinized the data by manually reviewing each transaction to ensure that all irregularities were identified.

B.  

The internal auditor employed the use of data analytics tools to sort, analyze, and detect anomalies in the data

C.  

The internal auditor started the data analysis process by selecting a random sample of transactions on which to perform further tests.

D.  

The internal auditor requested that the branch supervisor assist in identifying fraudulent transactions, as he was most familiar with the accounts being audited.

Discussion 0
Question # 80

An internal auditor is assessing fraud risks and creating a fraud risk matrix for a particular branch location. Which of the following is most likely to be included in the matrix?

Options:

A.  

Risks and relevant mitigating controls.

B.  

Business processes and relevant fraud risks.

C.  

Fraud scenarios and relevant risks.

D.  

Opportunity, rationalization, and pressure to commit fraud.

Discussion 0
Question # 81

Which of the following best describes the type of organizational culture known as adaptability culture ' ?

Options:

A.  

A results-oriented culture that values competitiveness and personal initiative

B.  

A culture that emerges in quick-response and high-risk decision-making environments

C.  

A culture that is characterized by low involvement with environmental and health issues

D.  

A culture that places high value on participation and meeting the needs of employees.

Discussion 0
Question # 82

An organization is testing a new IT system for digital data storage and security. The internal audit activity has been asked to evaluate the system in a consulting engagement. Although several internal auditors on staff are qualified to perform basic assessments of IT systems, none are familiar with the new system. Which of the following is a legitimate response to the prospective client?

1. Decline the engagement.

2. Proceed with the engagement, performing only those parts of the engagement that the internal auditors are qualified to perform.

3. Accept the engagement and develop the additional competencies in-house prior to the engagement ' s starting date.

4. Make arrangements to obtain assistance from a competent IT auditing expert.

Options:

A.  

1 and 4 only.

B.  

2 and 3 only.

C.  

1. 2, and 3 only.

D.  

1, 3, and 4 only.

Discussion 0
Question # 83

Which of the following statements is true regarding control activities?

Options:

A.  

Control activities are carried out by first-line and second-line functions to mitigate risks.

B.  

Control activities are implemented by internal auditors to mitigate risks to an acceptable level.

C.  

Control activities provide the foundation for the organization to establish its risk appetite.

D.  

Control activities are a precondition to setting risk tolerance levels.

Discussion 0
Question # 84

IT management requires all employees in the IT department to attend annual training on the department’s mission values and key performance measures This activity is designed to prevent which of the following conditions?

Options:

A.  

Knowledge’s kills gap

B.  

Monitoring gap

C.  

Accountability/reward failure

D.  

Communication failure

Discussion 0
Question # 85

An internal auditor is finalizing an audit report on the effectiveness of the organization ' s overall system of internal control. Several audit tests were performed, and the only issue identified was that the CEO frequently asks employees to make exceptions or bypass the organization ' s standard written policies and procedures. Which of the following conclusions is most appropriate for the auditor to report?

Options:

A.  

The auditor should indicate that the system of internal control is not effective.

B.  

The auditor should indicate that the system of internal control is generally effective, except for the minor issue identified.

C.  

The auditor should indicate that the system of internal control is effective.

D.  

The auditor cannot express a conclusive opinion in the audit report.

Discussion 0
Question # 86

A chief audit executive added more money to the IT training budget to ensure the organization ' s internal auditors were able to perform data analytics while performing an audit. Which core competency is being addressed?

Options:

A.  

Data analytics

B.  

IT fraud detection.

C.  

Continuing professional development

D.  

Due professional care.

Discussion 0
Question # 87

An internal auditor performed a consulting engagement last year which included assisting with management ' s design of controls over the procurement function. How should the chief audit executive plan an assurance engagement on the adequacy of the internal control system in the procurement function in the current year?

Options:

A.  

Assign the engagement to another internal auditor on staff

B.  

Outsource the engagement to ensure independence

C.  

Harness the auditor ' s knowledge of the procurement function by assigning the engagement to the same internal auditor

D.  

Postpone the engagement to the following year to ensure enough time has passed since the controls were designed

Discussion 0
Question # 88

Who is responsible for setting the risk appetite?

Options:

A.  

External auditors.

B.  

Chief risk officer.

C.  

Operations management.

D.  

Board of directors.

Discussion 0
Question # 89

Due to toe increased operational responsibility of the CEO. The chief audit executive (CAE) of an organization currently reports to the chief financial officer (CFO). What is the likely imped of such a situation?

Options:

A.  

There may be limitation m the scope of engagements that can be undertaken

B.  

The CPO could provide expert advice when auditing areas under his purview

C.  

The internal audit activity is adequately positioned when the CAE reports to a member of executive management

D.  

The expense of finance staff can be catted upon during an audit of finance-related areas

Discussion 0
Question # 90

Which of the following is the best reason why the engagement supervisor should take care in explaining to local management the criteria that will be used to measure the effectiveness of the control environment?

Options:

A.  

The assessment will cover soft controls and company values.

B.  

The assessment will focus on the policy for a particular process.

C.  

The assessment will lack a defined scope

D.  

The assessment will probably uncover fraud risks.

Discussion 0
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