IIA-CIA-Part1 Practice Questions

A.  

The decision to involve auditors in the IPO was made by former audit committee members; therefore, the CAE is not responsible and can proceed with the new assignment.

B.  

The CAE should reject the assignment, as such engagements are beyond the scope of auditors who are usually not familiar with root cause analysis methodology.

C.  

The engagement should be undertaken by audit assistants and other junior staff members who were not involved in the IPO process.

D.  

The CAE should disclose objectivity limitations to the audit committee and suggest alternatives, such as outsourcing the engagement.

A.  

The engagement client should be able to determine the scope to be applied to the engagement

B.  

The internal auditor should establish a scope that does not impair her objectivity

C.  

Any attempts by the engagement client to limit the scope should be considered a scope limitation

D.  

The scope should include reviewing the effectiveness of the internal control environment

A.  

The monthly payroll reports are not vetted to ensure terminated employees have been removed from the payroll system

B.  

The volume of nonroutine journal entries has steadily increased over time.

C.  

The database of approved suppliers has not been reviewed the last year

D.  

The recent employee survey indicates that some employees remain unaware of the organization’s whistieblower hotline.

A.  

The initial review of workpapers should be conducted after the final engagement report is issued.

B.  

Independent internal assessments of the internal audit activity should be performed by entry-level staff as part of on-the-job training.

C.  

Internal audit staff should be informed regularly of changes to policies and procedures.

D.  

Training documents should be destroyed at the end of the year to create space for the next year's training documents.

A.  

An employee receives a bonus for perfect attendance

B.  

During the past 18 months three chief financial officers have left the organization after having been promoted to the position

C.  

The organization does not perform any due diligence research on third party service providers

D.  

Three competitors are highly profitable but a fourth equal in size is approaching bankruptcy limits

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.

A.  

Obtain the city s vendor listing to determine whether there was an adequate number of firms available to solicit bids for protects

B.  

Obtain at of the city s financial records to identify any firms that received payments for contracted goods and services.

C.  

Obtain the city's contracting files to determine whether the city demonstrated efforts to solicit bids from various interested firms.

D.  

Obtain the city’s official public meeting minutes to determine whether there were concerns about the contracting practices

A.  

The auditor should consider local cultures and customs in various regions when assessing control effectiveness.

B.  

Regardless of their location, employees at all levels share responsibility for designing effective controls to mitigate risks.

C.  

To achieve an effective internal control environment, the organization's risk management plan must be documented and communicated to all levels throughout each region.

D.  

Setting clear objectives is a precondition to effectively identifying, assessing, and responding to the organization's risks.

A.  

Email correspondence.

B.  

Payment request forms.

C.  

Vendor invoices.

D.  

Bank statements.

A.  

Individual internal auditors.

B.  

Chief audit executive.

C.  

Board of directors.

D.  

CEO.

A.  

The audit committee.

B.  

The head of legal and compliance.

C.  

The chief audit executive.

D.  

Senior management.

A.  

Fraud specialists are better at using computer-assisted audit techniques

B.  

Fraud specialists are better equipped to act as an expert witness in court

C.  

Fraud specialists are better able to properly apply due professional care

D.  

Fraud specialists are better at using crime scene investigation techniques

A.  

Receipt of a signed and approved vendor setup form.

B.  

Segregation of duties between setting up vendors and making vendor payments.

C.  

System validation and edit checks on vendor identification number

D.  

A vendor setup policy and procedure.

A.  

The chief audit executive (CAE) has a dual reporting relationship within the organization.

B.  

The CAE performs an audit of a functional area that is also under the CAE's oversight.

C.  

The CAE has unrestricted access to information throughout the organization and to the board.

D.  

The board is involved in decisions to hire or remove the CAE and in drafting and approving an internal audit charter.

A.  

Have the new internal auditor’s previous boss be excused from the area during fieldwork.

B.  

Have the new internal auditor be responsible for the planning of the audit as well as the review of the audit fieldwork.

C.  

Have the new internal auditor assigned to other responsibilities and not work on the accounts payable audit engagement.

D.  

Have the new internal auditor assist with conducting the fieldwork, but ensure that her work is reviewed by the CA

E.