The Avant-garde Guide To IIA-CIA-Part1 Preparation

NEW QUESTION 1
An internal auditor is evaluating techniques management uses to mitigate risks within a particular product division. Which of the following is an example of risk reduction?

• A. Management sells the product division to a competitor.
• B. Management outsources the product division to a third party.
• C. Management allows the product division to remain unchanged.
• D. Management modifies the product division to minimize errors.

Answer: D

NEW QUESTION 2
Which of the following behaviors could represent a significant ethical risk if exhibited by an organization's board?

• A. Requesting a private meeting with senior management, without the presence of the chief audit executive.
• B. Intervening during an audit involving ethical wrongdoing.
• C. Discussing periodic reports of ethical breaches.
• D. Authorizing an investigation of an unsafe product.

Answer: B

NEW QUESTION 3
Which of the following is most likely to function as a directive control?

• A. Security dogs.
• B. Alert employees.
• C. Insurance claims.
• D. Cycle counts.

Answer: B

NEW QUESTION 4
Which of the following would be the most important consideration by the internal audit activity when selecting employees to perform an internal quality assessment?

• A. Their understanding of auditing standards.
• B. Previous experience working with the internal audit activity.
• C. Their reporting line within the organization.
• D. The nature of their regular duties and responsibilities.

Answer: A

NEW QUESTION 5
What is the additional advantage of facilitated workshops, in comparison with structured interviews, used when testing the effectiveness of entity-level controls?

• A. During facilitated workshops, people more openly say things to internal auditors than during private interviews.
• B. Internal auditors do not need other sources of information, as the data gathered during facilitated workshops is sufficient.
• C. Facilitated workshops create a synergy of discussion that can bring multiple perspectives to the same issue.
• D. The testimonial evidence obtained during facilitated workshops is generally considered more reliable.

Answer: C

NEW QUESTION 6
According to IIA guidance, which of the following should be formally documented in the internal audit charter?

• A. The internal audit activity's responsibility for imposing risk management processes.
• B. The internal audit activity's responsibility for the organization's governance framework.
• C. The nature of consulting services provided by the internal audit activity.
• D. The budgeting process for the internal audit activity.

Answer: C

NEW QUESTION 7
A chief audit executive (CAE) reports functionally to the CEO and administratively to the chief financial officer, both of whom serve on the company's board of directors. According to IIA guidance, which of the following would offer the greatest protection for the independence of the internal audit activity?

• A. Appoint the CAE as a member of the board.
• B. Move the CAE's functional reporting to an executive who is not on the board.
• C. Obtain full board approval of the internal audit activity's annual audit plan.
• D. Move the CAE's functional reporting to the audit committee.

Answer: D

NEW QUESTION 8
A government agency maintains a system of internal control, according to the COSO model, and has made a change to its employee performance reviews and rewards program. This change relates to which of the following components of COSO's internal control framework?

• A. Control environment.
• B. Control activities.
• C. Information and communication.
• D. Monitoring activities.

Answer: A

NEW QUESTION 9
Which of the following activities should the chief audit executive perform to ensure compliance with an organization's code of conduct?

• A. Act as an adviser to the committee responsible for reviewing violations of the code.
• B. Review and adjudicate all violations of the code of conduct.
• C. Lead the committee responsible for the oversight of the code.
• D. Implement a system of procedures to inform all employees of the code.

Answer: A

NEW QUESTION 10
According to the COSO enterprise risk management framework, which of the following best describes the activity that helps ensure risk responses are carried out effectively?

• A. Objective setting.
• B. Control activities.
• C. Information and communication.
• D. Event identification.

Answer: B

NEW QUESTION 11
An organization is beginning to implement an enterprise risk management program. One of the first steps is to develop a common risk language. Which of the following statements about a common risk language is true?

• A. Management will be able to reduce inherent risk because they will have a better understanding of risk.
• B. Internal auditors will be able to reduce their sample sizes because controls will be more consistent.
• C. Stakeholders will have more assurance that the risks are assessed consistently.
• D. Decision makers will understand that the likelihood of missing or ineffective controls will be reduced.

Answer: C

NEW QUESTION 12
Which of the following activities is most likely to require a fraud specialist to supplement the knowledge and skills of the internal audit activity?

• A. Planning an engagement of the area in which fraud is suspected.
• B. Employing audit tests to detect fraud.
• C. Interrogating a suspected fraudster.
• D. Completing a process review to improve controls to prevent fraud.

Answer: B

NEW QUESTION 13
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 14
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 15
An IT contractor applied for an internal audit position at a bank. The contractor worked for the bank's IT security manager two years ago. If the audit manager interviewed the contractor and wants to extend a job offer, which of the following actions should the chief audit executive pursue?

• A. Allow the audit manager to hire the contractor and state that the individual is free to perform IT audits, including security.
• B. Not allow the audit manager to hire the contractor, as it would be a conflict of interest.
• C. Allow the audit manager to hire the contractor, but state that the individual is not allowed to work on IT security audits for one year.
• D. Not allow the audit manager to hire the contractor and ask the individual to apply again in one year.

Answer: A

NEW QUESTION 16
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 17
In which of the following scenarios would the chief audit executive (CAE) be required to decline the assignment?

• A. The CAE would need to procure external services to deliver the internal audit assurance program.
• B. There is no expertise within the internal audit team for detecting and investigating fraud.
• C. There is no expertise within the internal audit team for auditing an IT engagement.
• D. There is no available expertise on the internal audit team to perform a consulting engagement.

Answer: B

NEW QUESTION 18
According to IIA guidance, which of the following statements is true when an internal auditor performs consulting services that improve an organization's operations?

• A. The services must be aligned with those defined in the internal audit charter.
• B. The services must not be performed by the same internal auditor who performed assurance services, in order to maintain objectivity.
• C. The services may preclude assurance services from the consulting engagement.
• D. The services impose no responsibility to communicate information other than to the engagement client.

Answer: B

NEW QUESTION 19
Which of the following factors have the greatest influence on the independence of the internal audit activity?

• A. Quality assessments and cultural biases of the internal audit activity.
• B. Rotational assignments and familiarity of the internal audit activity.
• C. Employee incentives and self review of the internal audit activity.
• D. Organizational positioning and scope control of the internal audit activity.

Answer: D

NEW QUESTION 20
According to IIA guidance, which of the following external groups is most likely to represent a liability risk, based on activities associated with the organization's corporate social responsibility program?

• A. Consumers.
• B. Activists.
• C. Suppliers.
• D. Investors.

Answer: B

NEW QUESTION 21
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