IIA-CIA-Part1 | Regenerate Certified Internal Auditor - Part 1, The Internal Audit Activitys Role In Governance, Risk, And Control IIA-CIA-Part1 Practice Exam

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NEW QUESTION 1
Which of the following scenarios best illustrates the principle of due professional care?

  • A. An internal auditor evaluates the significant risks arising from a consulting engagement.
  • B. An internal auditor declares that he would have a conflict of interest in providing planned audit support.
  • C. An internal auditor has been given sufficient authority to access documents needed to make an appraisal of an issue.
  • D. An internal auditor uses technology-based audit techniques to ensure that all significant risks are identified.

Answer: A

NEW QUESTION 2
Which of the following enhances the independence of the internal audit activity?

  • A. The chief audit executive (CAE) approves the annual internal audit plan.
  • B. The CAE administratively reports to the board.
  • C. The audit committee approves the CAE's annual salary increase.
  • D. The chief executive officer approves the internal audit charter.

Answer: C

NEW QUESTION 3
According to IIA guidance, which of the following is an area in which the internal auditor should be proficient?

  • A. Management principles.
  • B. Computerized information systems.
  • C. Internal audit standards, procedures, and techniques.
  • D. Fundamentals of accounting, economics, and finance.

Answer: C

NEW QUESTION 4
What should the internal auditor's role be in assessing the organization's ethical climate?

  • A. Perform ongoing surveys of the employees, customers, and partners of the organization to assess the organization's ethical climat
  • B. ^Evaluate the effectiveness of the organization's strategies and
  • C. processes for achieving the desired level of legal and ethical compliance.
  • D. Maintain a whistleblower hotline to identify inappropriate or illegal activity within the organization.
  • E. Perform background checks of potential new employees before they are hired by the organization.

Answer: B

NEW QUESTION 5
Who is responsible for setting the risk appetite?

  • A. External auditors.
  • B. Chief risk officer.
  • C. Operations management.
  • D. Board of directors.

Answer: D

NEW QUESTION 6
Which of the following best describes the details that must be included in the quality assurance and improvement program (QAIP) report to senior management and the board?

  • A. The scope and frequency of internal and external assessments as well as the qualifications and independence of the assessor.
  • B. The scope and cost of the QAI
  • C. frequency of internal and external assessments, and conclusions of the assessor.
  • D. The scope, findings, risks, recommendations, and agreed-upon improvement actions.
  • E. The number and types of people involved in the assessment, costs, and duration of the QAIP

Answer: C

NEW QUESTION 7
To fill a critical vacancy, an internal auditor is assigned temporarily to a nonaudit role in the purchasing department, where she worked previously before joining the internal audit activity. According to IIA guidance, which of the following statements is true regarding these circumstances?

  • A. The chief audit executive (CAE) should review all work performed by the auditor during her temporary assignment to ensure no impairments.
  • B. The CAE may conduct audits in the purchasing department during the auditor's temporary assignment.
  • C. The auditor should obtain the CAE's approval as to the nature and scope of the duties she is permitted to perform during her temporary assignment.
  • D. Any work performed by the auditor during her temporary assignment must conform to the internal audit charter.

Answer: C

NEW QUESTION 8
What is the primary benefit to the internal audit activity for undertaking an internal quality assessment?

  • A. To help the internal audit activity complete its annual assurance plan.
  • B. To identify inefficiencies within the internal audit team.
  • C. To help improve the overall quality of the internal audit activity's work.
  • D. To identify key risks and areas of concern within the organization.

Answer: C

NEW QUESTION 9
According to IIA guidance, which of the following best describes internal auditors' responsibility regarding fraud?

  • A. Internal auditors should take a leading role in investigating all fraud-related cases.
  • B. Internal auditors must have sufficient knowledge to evaluate the risk of fraud.
  • C. Internal auditors should report all fraud cases to law enforcement agents, in accordance with the Code of Ethics.
  • D. Internal auditors are responsible for ensuring that fraud does not occur.

Answer: B

NEW QUESTION 10
Forty-five percent of an organization's customer payments are submitted online. Eight percent of online payments are rejected. Executive management decides to outsource its online payment services to a contractor that will assume 75 percent of the total value of rejected payments. The organization estimates $1.25 million customer payments due during the contract period.
Which of the following represents the organization's residual risk for online customer payments due?

  • A. $11, 250
  • B. $25, 000
  • C. $33, 750
  • D. $45, 000

Answer: A

NEW QUESTION 11
Which of the following actions should the audit committee take to promote organizational independence for the internal audit activity?

  • A. Delegate final approval of the risk-based internal audit plan to the chief audit executive (CAE).
  • B. Approve the annual budget and resource plan for the internal audit activity.
  • C. Assist the CAE with hiring objective and competent internal audit staff.
  • D. Encourage the CAE to communicate and coordinate with the external auditor.

Answer: A

NEW QUESTION 12
Which of the following best ensures the independence of the internal audit activity?
* 1. The CEO and audit committee review and endorse any changes to the approved audit plan on an annual basis.
* 2. The audit committee reviews the performance of the chief audit executive (CAE) periodically.
* 3. The internal audit charter requires the CAE to report functionally to the audit committee.

  • A. 3 only
  • B. 1 and 2 only
  • C. 2 and 3 only
  • D. 1, 2, and 3

Answer: C

NEW QUESTION 13
According to IIA guidance, which of the following are macro-level audit activities performed for an assurance engagement of the purchasing department?
* 1. Obtain and review all purchasing-related audit reports issued within the past year.
* 2. Meet with the quality assurance group to discuss its previous reports of any purchasing-related findings.
* 3. Review a memo written by the purchasing manager that outlines ongoing problems with the purchasing
software.
* 4. Request a copy of the report from a purchasing audit conducted last year by an external service provider.

  • A. 1 and 2.
  • B. 1 and 3.
  • C. 2 and 4.
  • D. 3 and 4.

Answer: A

NEW QUESTION 14
Which of the following would not be considered part of preliminary survey of an engagement area?

  • A. Interviews with individuals affected by the entity.
  • B. Functional walk through test.
  • C. Analytical reviews.
  • D. Sampling scope.

Answer: D

NEW QUESTION 15
Which of the following actions best demonstrates that an internal auditor is exercising due professional care?

  • A. The auditor performs thorough reviews and provides absolute assurance of regulatory compliance.
  • B. The auditor is alert to the possibility of fraud and activities where irregularities are most likely to occur.
  • C. The auditor recommends improvements for all of the organization's procedures and practices.
  • D. The auditor is cognizant of reducing travel expenses by combining a personal vacation with a business trip.

Answer: B

NEW QUESTION 16
Which of the following is the best way to detect fraud?

  • A. Conduct anti-fraud training.
  • B. Perform background investigations.
  • C. Implement process controls.
  • D. Activate a whistleblower hotline.

Answer: D

NEW QUESTION 17
Non-statistical sampling does not require which of the following?

  • A. The sample to be representative of the population.
  • B. The sample to be selected haphazardly.
  • C. A smaller sample size than if selected using statistical sampling.
  • D. Projecting the results to the population.

Answer: C

NEW QUESTION 18
An internal audit charter, approved by the board, restricts the internal audit activity to providing assurance only on the reliability of financial information and the effectiveness of internal accounting controls. Which of the following statements is true regarding the extent to which the external auditor may rely on the internal audit activity's work?

  • A. The external auditor may make full use of the work, as the audit charter is very specific as to the work the internal audit activity may undertake.
  • B. The external auditor may use the work, as the board has approved the charter, thus taking responsibility for any deficiencies.
  • C. The external auditor must disregard the work, as the scope of the charter may introduce bias and result in a lack of due professional care.
  • D. The external auditor may use the work with caution, due to the internal audit activity's scope and responsibility restrictions.

Answer: D

NEW QUESTION 19
An internal auditor is conducting an assessment of the organization's fraud prevention program using the COSO enterprise risk management framework. According to this framework, which of the following activities would fall under the control environment component for preventing fraud?
* 1. The organization uses an automated authority approval matrix to control payments.
* 2. The organization has a whistleblower hotline that is available to employees.
* 3. Annually, every manager completes a comprehensive fraud assessment of his or her department.
* 4. Annually, the organization reviews and communicates the code of expected behavior.

  • A. 1 and 2.
  • B. 1 and 3.
  • C. 2 and 3.
  • D. 2 and 4.

Answer: D

NEW QUESTION 20
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