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IIA-CIA-Part1 Practice Questions

Internal Audit Fundamentals

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Question # 76

Due to unfavorable economic conditions management decided to postpone new investments for the next year. Which of the following best describes the risk management strategy used to address this situation?

Options:

A.  

Risk mitigation

B.  

Risk avoidance

C.  

Risk reduction

D.  

Risk transfer

Discussion 0
Question # 77

Which of the following is true about a system of internal control?

Options:

A.  

Internal control should be updated at least annually.

B.  

Technology does not change the internal control landscape.

C.  

Strategy should fit the system of internal control.

D.  

Articulating measurable objectives is part of internal control.

Discussion 0
Question # 78

An accounts payable clerk has recently transferred into the internal audit activity and has been assigned to an engagement related to accounts payable processes for which he was previously responsible. Which of the following is the best action for the new internal auditor to take?

Options:

A.  

If it is an assurance engagement, accept the assignment because direct knowledge of the existing accounts payable processes wifi provide depth and add more value.,

B.  

If it is a consulting engagement, decline the assignment and ask to be reassigned, because in a consulting engagement the auditor must not assess operations for areas in which they were previously responsible.

C.  

If it is a consulting engagement, accept the assignment because direct knowledge of the existing accounts payable processes will provide depth and add more value.

D.  

If it is an assurance engagement, accept the assignment because the chief audit executive had knowledge of the internal auditor's previous role when this engagement was assigned.

Discussion 0
Question # 79

Which of the following types of policies best helps promote objectivity in the interna! audit activity's work?

Options:

A.  

Policies that are distributed to all members of the internal audit activity and require a signed acknowledgment,

B.  

Policies that match internal auditors' performance with feedback from management of the area under review.

C.  

Policies that keep internal auditors in areas where they have vast audit expertise.

D.  

Policies that provide examples of inappropriate business relationships.

Discussion 0
Question # 80

An external assessment was performed as part of the organization's quality assurance and improvement program. Which of the following conclusions confirms that the internal audit activity is in conformance with the Standards'?

Options:

A.  

The chief audit executive is well qualified and has responsibilities over operational areas that the internal audit activity assesses.

B.  

Periodic self-assessments are assigned to entry-level internal audit staff to support their continuing professional development.

C.  

All audit workpapers are reviewed and signed by the engagement supervisor before the audit report is issued.

D.  

Employees who rotate into the internal audit activity from other areas of the organization are assigned to audit areas where they previously worked, to take advantage of their operational expertise and experience.

Discussion 0
Question # 81

During a procurement process audit the internal audit activity undertakes a fraud risk assessment and considers a range of possible fraud scenarios within the process. Which of the following scenarios constitutes a pressure to commit fraud?

Options:

A.  

An employee believes his poor compensation package justifies engaging in unethical behavior.

B.  

The head of the department is the only signatory to purchase orders issued to third party contractors.

C.  

Some employees strongly believe monetary gifts from vendors is a means of saving for life after employment.

D.  

One of the employees was found to have an obsession with expensive jewelry

Discussion 0
Question # 82

When performing an audit of the risk management process an auditor makes the observations listed below. Which poses the greatest risk to the organization?

Options:

A.  

The identified risks have not undergone a detailed review to ensure completeness in the past two years.

B.  

The controls in place to mitigate the risks are not tested on an annual basis to confirm operating effectiveness.

C.  

The process in place to identify and evaluate new risks to the organization is informal and poorly documented.

D.  

The identified risks have not been ranked to establish their importance and risk management priority.

Discussion 0
Question # 83

Due to the 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 impact of such a situation?

Options:

A.  

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

B.  

The CFO 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 expertise of finance staff can be called upon during an audit of finance-related areas

Discussion 0
Question # 84

Which of the following controls would best mitigate the risk of fraud in the bidding process?

Options:

A.  

Have a bidding committee open the tender bids.

B.  

Restrict the time to submit tender bids.

C.  

Keep minutes of pre-bid meetings.

D.  

Allow the higher tenders to rebid.

Discussion 0
Question # 85

According to MA guidance, which of the following statements is true regarding internal auditors' use of technology-based techniques?

Options:

A.  

Auditors must consider using technology if it advances the engagement, even when implementation costs exceed the benefits.

B.  

Auditors must considering using technology to reduce the organization's risk by detecting all instances of fraud.

C.  

Auditors must consider using technology only when the Implementation cost does not exceed benefits.

D.  

Auditors must consider using technology in a variety of engagements to ensure that their work is substantiated and infallible.

Discussion 0
Question # 86

Which of the following would best preserve the organizational independence of the internal audit activity?

Options:

A.  

The internal audit charter is approved by the chief audit executive (CAE).

B.  

The CAE reports functionally to the CEO.

C.  

The CAE's internal audit plan is endorsed by the board.

D.  

The chief financial officer determines the appointment of the CA

E.  

Discussion 0
Question # 87

Operational management in the IT department has developed key performance indicator reports, which are reviewed in detail during monthly staff meetings. This activity is designed to prevent which of the following conditions?

Options:

A.  

Knowledge/skills gap,

B.  

Monitoring gap.

C.  

Accountability/reward failure,

D.  

Communication failure.

Discussion 0
Question # 88

Which of the following statements about internal audit consulting engagements is true?

Options:

A.  

The primary purpose of a consulting engagement is to assess evidence and provide conclusions.

B.  

The internal audit activity determines the nature and scope of work for the specific consulting engagement

C.  

Internal auditors may provide consulting services relating to operations for which they had previous responsibilities.

D.  

It is not appropriate to communicate control issues identified during consulting engagements to the board

Discussion 0
Question # 89

Which of the following resources would be most effective for an organization that would like to improve how it informs stakeholders of its social responsibility performance?

Options:

A.  

ISO 26000.

B.  

Global Reporting Initiative.

C.  

Open Compliance and Ethics Group.

D.  

COSO’s enterprise risk management framework

Discussion 0
Question # 90

The board of a newly established organization was discussing the contents of the draft internal audit charter One board member suggested adding to the charter an obligation for the internal audit activity to develop controls in business procedures. The board member explained that the new organization needs professional-level developers, internal auditors have the necessary skills and competencies, and the internal audit activity is well positioned to assume this responsibility. Which of the following would be a potential concern if the board member’s suggestion is adopted?

Options:

A.  

Due professional care.

B.  

Internal audit objectivity.

C.  

Risk management assurance.

D.  

Professional development.

Discussion 0
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