IIA IIA-CIA-Part1 Free Practice Questions

NEW QUESTION 1
Which of the following is considered a violation of The IIA's Code of Ethics?

• A. An auditor conveys public information about an organization's financial condition.
• B. An auditor reports a manager's illegal activity to senior management, rather than reporting the incident to the appropriate external authority.
• C. An auditor receives allegations of fraud from a whistleblower and immediately reports the allegations to senior management.
• D. An auditor reports material deficiencies, despite the fact that management is already aware of the defects.

Answer: C

NEW QUESTION 2
A multinational organization has asked the internal audit activity to assist in setting up the organization's risk management system. The chief audit executive (CAE) agrees to take on the engagement as a consultant. Which of the following tasks is appropriate for the CAE to undertake?

• 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.

Answer: D

NEW QUESTION 3
Which of the following scenarios best illustrates a rationalization as the root cause of potential fraud?

• A. Managers who have been with the organization for several decades become aware that newly hired, younger managers are being moved more quickly into senior positions.
• B. The controller at a nationwide manufacturing company recently opted to no longer require two-week mandatory vacations for accounting staff.
• C. Security cameras that monitor cash handling at the register are not functioning.
• D. The organization is slowly phasing out three mature products that produce the highest commissions for the sales staff.

Answer: B

NEW QUESTION 4
The chief audit executive (CAE) has assigned an internal auditor to an upcoming engagement. Which of the following requirements would most likely indicate that the internal auditor was assigned to an assurance engagement?

• A. The assigned internal auditor must determine the objectives, scope, and techniques of the engagement.
• B. The CAE must personally obtain the needed skills, knowledge, or other competencies if the internal auditor does not have them.
• C. The assigned internal auditor must not assume management responsibilities while performing the engagement.
• D. The assigned internal auditor must maintain objectivity while performing the engagement.

Answer: A

NEW QUESTION 5
A new director was hired to lead the internal audit activity at a small start-up company. Which of the following assignments would impair the director's independence?

• A. Preparing the financial statements for the company's defined contribution plan.
• B. Performing a pre-implementation review of the company's payroll application.
• C. Providing the COBIT framework as a possible IT management tool.
• D. Reviewing the company's policy for foreign currency translation adjustments for compliance with accounting standards.

Answer: A

NEW QUESTION 6
Which of the following is an example of a management control technique?

• A. A budget.
• B. A risk assessment.
• C. The board of directors.
• D. The control environment.

Answer: A

NEW QUESTION 7
An organization decides to take no action on one of its financial risks because the cost of implementing the control outweighs the value of the asset being protected. Which of the following best describes this risk strategy?

• A. Risk avoidance.
• B. Risk-benefit analysis.
• C. Risk sharing.
• D. Risk acceptance.

Answer: D

NEW QUESTION 8
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 9
Which of the following would be considered a violation of The IIA's mandatory guidance on independence?

• A. The chief audit executive (CAE) reports functionally to the board and administratively to the chief financial officer.
• B. The board seeks senior management's recommendation before approving the annual salary adjustment of the CAE.
• C. The CAE confirms to the board, at least once every five years, the organizational independence of the internal audit activity.
• D. The CAE updates the internal audit charter and presents it to the board for approval periodically, not on a specific timeline.

Answer: B

NEW QUESTION 10
Upon joining the internal audit activity, each new auditor receives a copy of the audit handbook. Which of the following handbook policies has the greatest risk of compromising audit objectivity?

• A. Internal auditors should obtain 80 hours of continuing professional education every two years, 20 of which should be audit-related, and the remainder may be operations-related.
• B. Internal auditors should rotate to other areas of the organization for nonaudit assignments to gain an understanding of the organization's operations.
• C. Internal auditors should have direct and unrestricted access to personnel and information throughout the organization and the governing board.
• D. Internal auditors should undergo annual performance appraisals conducted by the chief audit executive, who reports administratively to the chief financial officer.

Answer: B

NEW QUESTION 11
Which of the following is most likely to be considered a control weakness?

• A. Vendor invoice payment requests are accompanied by a purchase order and receiving report.
• B. Purchase orders are typed by the purchasing department using prenumbered forms.
• C. Buyers promptly update the official vendor listing as new supplier sources become known.
• D. Department managers initiate purchase requests that must be approved by the plant superintendent.

Answer: C

NEW QUESTION 12
An organization invests its savings in a volatile stock with the potential for high gains rather than a mutual fund with a lower expected return and lower volatility. This best describes which of the following risk concepts?

• A. Risk identification.
• B. Risk appetite.
• C. Risk capacity.
• D. Risk tolerance.

Answer: D

NEW QUESTION 13
According to IIA guidance, which of the following roles would be appropriate for an internal auditor regarding fraud risk?
* 1. Identification.
* 2. Mitigation.
* 3. Remediation.
* 4. Reduction.

• A. 1 onl
• B. |
• C. 1 and 4 only.
• D. 1, 3, and 4 only.
• E. 1,2, 3, and 4.

Answer: B

NEW QUESTION 14
While preparing for an audit of senior management expenses, the chief audit executive (CAE) learns that management is unable to locate a number of original expense claims to support the related disbursements. She decides to defer the engagement until they can be located. Which of the following principles likely guided the CAE's decision?

• A. Objectivity.
• B. Proficiency.
• C. Independence.
• D. Due professional care.

Answer: D

NEW QUESTION 15
Which of the following responsibilities would fall under the role of the chief audit executive, rather than internal audit staff or the audit manager?

• A. Manage and support a quality assurance and improvement program.
• B. Maintain industry-specific knowledge appropriate to the audit engagements
• C. Set clear performance standards for internal auditors and the internal audit activity.
• D. Apply problem-solving techniques for routine situations.

Answer: C

NEW QUESTION 16
Which of the following is a common type of payroll fraud?

• A. Unauthorized overtime.
• B. Fictitious employees.
• C. Unearned bonuses or commissions.
• D. Skimming.

Answer: B

NEW QUESTION 17
......