Replace Certified Internal Auditor - Part 1, The Internal Audit Activitys Role In Governance, Risk, And Control IIA-CIA-Part1 Preparation Labs

NEW QUESTION 1
A former line supervisor from the Financial Services Department has completed six months of a two-year development opportunity with the internal audit activity (IAA). She is assigned to a team that will audit the organization's payroll function, which is managed by the Human Resources Department. Which of the following statements is most relevant regarding her independence and objectivity with respect to the payroll audit?

• A. She may participate, but only after she has completed one year with the IAA.
• B. She may participate, because she did not previously work in the Human Resources Department.
• C. She may participate, but she must be supervised by the auditor in charge.
• D. She may participate for training purposes, to build her knowledge of the IAA.

Answer: B

NEW QUESTION 2
An organization has implemented a software system that requires a supervisor to approve transactions that would cause treasury dealers to exceed their authorized limit. This is an example of which of the following types of controls?

• A. Preventive controls.
• B. Detective controls.
• C. Soft controls.
• D. Directive controls.

Answer: A

NEW QUESTION 3
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 4
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 5
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 6
According to IIA guidance, which of the following are considerations of due professional care when an internal auditor conducts a formal consulting engagement?
* 1. The complexity of the work required.
* 2. The needs and expectations of the client.
* 3. The potential value of the engagement compared to the effort.
* 4. Information regarding assumptions and procedures to be employed.

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

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
An internal auditor is using a spreadsheet application to review a cash flow forecast prepared by management. Which of the following correctly identifies the type of evidence this information represents?

• A. Competent, corroborative evidence of future working capital requirements.
• B. Sufficient, analytical evidence of the cash flow position at a given point of time in the future.
• C. Competent, documentary evidence of future cash flow changes within the organization.
• D. Sufficient, circumstantial evidence of the future solvency of the organization.

Answer: C

NEW QUESTION 9
A large sales organization maintains a system of internal control according to the COSO model and has updated its code of conduct. This change relates to which component of the COSO framework?

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

Answer: D

NEW QUESTION 10
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 11
A credit card company detects potential errors in credit card numbers by checking whether all entered numbers contain the correct amount of digits. This is an example of which of the following IT controls?

• A. Logic test.
• B. Check digits.
• C. Data integrity tests.
• D. Balancing control activities.

Answer: A

NEW QUESTION 12
The chief audit executive (CAE) is planning to conduct an internal assessment of the internal audit activity (IAA). Part of this assessment will include benchmarking. According to IIA guidance, which of the following qualitative metrics would be appropriate for the CAE to use?
* 1. Average client customer satisfaction score for a given year.
* 2. Client survey comments on how to improve the IAA.
* 3. Auditor interviews once an audit has been completed.
* 4. Percentage of audits completed within 90 days.

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

Answer: C

NEW QUESTION 13
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 14
Which of the following must be in existence as a precondition to developing an effective system of internal controls?

• A. A monitoring process.
• B. A risk assessment process.
• C. A strategic objective-setting process.
• D. An information and communication process.

Answer: B

NEW QUESTION 15
Which of the following best describes the misdirection of payments on accounts receivable to an employee's bank account?

• A. Fraud open on the books.
• B. Fraud hidden on the books.
• C. Fraud off the books.
• D. Fraud on the balance sheet.

Answer: C

NEW QUESTION 16
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 17
According to IIA guidance, which of the following statements is true regarding periodic internal assessments of the internal audit activity?

• A. Internal assessments are conducted to benchmark the internal audit activity's performance againstindustry best practices.
• B. Internal assessments must be performed at least once every five years by a qualified assessor.
• C. An internal auditor may perform a peer review of a colleague's workpapers, as long as the auditor wasn't involved in the audit under review.
• D. Follow-up to ensure appropriate improvements are implemented is a recommended, but not mandatory, element of internal assessments.

Answer: C

NEW QUESTION 18
Which of the following documents is most appropriate in promoting the objectivity of the internal audit
activity?

• A. Usage of IT system policy.
• B. Risk management framework.
• C. Acceptance of gifts policy.
• D. Personal responsibility policy.

Answer: C

NEW QUESTION 19
Which of the following statements describes impairment to the internal auditor's objectivity?

• A. An internal auditor reviews a purchasing agent's contract drafts prior to their execution.
• B. An internal auditor reduces the scope of an audit engagement due to budget restrictions.
• C. An internal auditor receives a promotional gift that is available to the organization's employees.
• D. An internal auditor performs an assessment of the operations for which he was recently responsible.

Answer: D

NEW QUESTION 20
Which of the following best demonstrates the authority of the internal audit activity?

• A. Suggesting alternatives to decision makers.
• B. Improving the integrity of information.
• C. Determining the scope of internal audit services.
• D. Achieving engagement objectives.

Answer: C

NEW QUESTION 21
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