Practice Free IIA-CIA-Part1 Exam Online Questions
Question #131
The internal audit activity was denied access to expenditure and budget reports because they were considered to be confidential.
This situation would result in which of the following limitations of the internal audit activity?
- A . Independence
- B . Integrity
- C . objectivity
- D . Authority
Correct Answer: D
D
Explanation:
Being denied access to necessary information such as expenditure and budget reports because they are considered confidential affects the authority of the internal audit activity. Authority, as granted by the audit charter, should include unrestricted access to all records and data required by the audit team to perform its duties effectively. Limitations on access impair the audit’s scope and the auditors’ ability to conduct thorough and complete audits.
Reference: IIA Standard 1110: Organizational Independence, which stresses the importance of internal auditors having appropriate and unrestricted access to information.
D
Explanation:
Being denied access to necessary information such as expenditure and budget reports because they are considered confidential affects the authority of the internal audit activity. Authority, as granted by the audit charter, should include unrestricted access to all records and data required by the audit team to perform its duties effectively. Limitations on access impair the audit’s scope and the auditors’ ability to conduct thorough and complete audits.
Reference: IIA Standard 1110: Organizational Independence, which stresses the importance of internal auditors having appropriate and unrestricted access to information.
Question #132
Which of the following fundamental principles of The IIA’s Code of Ethics is best described as performing work honestly diligently and responsibly?
- A . Integrity
- B . Proficiency
- C . Due Professional Care
- D . Competency
Correct Answer: A
A
Explanation:
The fundamental principle of The IIA’s Code of Ethics best described as performing work honestly, diligently, and responsibly is Integrity. This principle is foundational to the ethical conduct expected of internal auditors, underpinning their professional behavior and ensuring trust in their work and judgments.
Reference: The IIA’s Code of Ethics, specifically the section on Integrity, which outlines the expectation for internal auditors to work with honesty and diligence.
A
Explanation:
The fundamental principle of The IIA’s Code of Ethics best described as performing work honestly, diligently, and responsibly is Integrity. This principle is foundational to the ethical conduct expected of internal auditors, underpinning their professional behavior and ensuring trust in their work and judgments.
Reference: The IIA’s Code of Ethics, specifically the section on Integrity, which outlines the expectation for internal auditors to work with honesty and diligence.
Question #133
A chief audit executive has reported to the board that the internal audit activity is lacking financial accounting knowledge for specific audit projects.
Upon approval from the board which of the following hiring approaches is best in this situation?
- A . An inbound rotational program
- B . A full-time permanent recruitment
- C . An outbound rotational program
- D . A guest auditor program
Correct Answer: D
D
Explanation:
In situations where the internal audit activity lacks specific financial accounting knowledge for certain audit projects, implementing a guest auditor program is a strategic approach. This program allows the organization to bring in external experts or auditors with specialized knowledge on a temporary basis to address the specific needs of the audit. This approach provides the required expertise without the long-term commitment of a full-time hire, ensuring flexibility and immediate enhancement of the audit team’s capabilities.
Reference: The IIA Standards: Standard 1210 C Proficiency: "Internal auditors must possess the knowledge, skills, and other competencies needed to perform their individual responsibilities."
IIA Practice Guide: "Guest Auditor Programs": Discusses the benefits of bringing in external experts for specialized audit needs.
D
Explanation:
In situations where the internal audit activity lacks specific financial accounting knowledge for certain audit projects, implementing a guest auditor program is a strategic approach. This program allows the organization to bring in external experts or auditors with specialized knowledge on a temporary basis to address the specific needs of the audit. This approach provides the required expertise without the long-term commitment of a full-time hire, ensuring flexibility and immediate enhancement of the audit team’s capabilities.
Reference: The IIA Standards: Standard 1210 C Proficiency: "Internal auditors must possess the knowledge, skills, and other competencies needed to perform their individual responsibilities."
IIA Practice Guide: "Guest Auditor Programs": Discusses the benefits of bringing in external experts for specialized audit needs.
Question #134
Which of the following is a responsibility of the internal audit activity as it relates to risk and risk management?
- A . Evaluating and suggesting improvements to the risk management process.
- B . Establishing the organization’s risk appetite.
- C . Determining whether the risk attitude is aligned with shareholder interests.
- D . Ensuring an adequate risk management system is in place.
Correct Answer: A
A
Explanation:
A responsibility of the internal audit activity as it relates to risk and risk management is evaluating and suggesting improvements to the risk management process. This role includes assessing the adequacy and effectiveness of the process in identifying, analyzing, and managing risks, as well as recommending improvements based on audit findings.
Reference: IIA Standards for the Professional Practice of Internal Auditing related to risk management.
A
Explanation:
A responsibility of the internal audit activity as it relates to risk and risk management is evaluating and suggesting improvements to the risk management process. This role includes assessing the adequacy and effectiveness of the process in identifying, analyzing, and managing risks, as well as recommending improvements based on audit findings.
Reference: IIA Standards for the Professional Practice of Internal Auditing related to risk management.
Question #135
According to IIA guidance, which of the following statements is true regarding the internal audit activity’s quality assurance and improvement program (QAIP)?
- A . Internal assessments rely solely on the review of completed audit engagements for demonstrated performance
- B . The chief audit executive is responsible for assessing the suitability and competence of an external assessor.
- C . QAIP results must first be discussed with the board and approval obtained for distribution to senior management
- D . At the board’s discretion, the frequency of external assessments can exceed the five-year guideline
Correct Answer: D
D
Explanation:
According to the IIA guidance, the frequency of external assessments can exceed the five-year guideline at the board’s discretion. This flexibility allows organizations to conduct external quality assessments more frequently than the minimum standard based on their specific needs, risk exposure, or changes in the operating environment, ensuring continuous improvement and adherence to best practices in internal auditing.
Reference: Institute of Internal Auditors (IIA) – International Professional Practices Framework (IPPF)
D
Explanation:
According to the IIA guidance, the frequency of external assessments can exceed the five-year guideline at the board’s discretion. This flexibility allows organizations to conduct external quality assessments more frequently than the minimum standard based on their specific needs, risk exposure, or changes in the operating environment, ensuring continuous improvement and adherence to best practices in internal auditing.
Reference: Institute of Internal Auditors (IIA) – International Professional Practices Framework (IPPF)
Question #135
According to IIA guidance, which of the following statements is true regarding the internal audit activity’s quality assurance and improvement program (QAIP)?
- A . Internal assessments rely solely on the review of completed audit engagements for demonstrated performance
- B . The chief audit executive is responsible for assessing the suitability and competence of an external assessor.
- C . QAIP results must first be discussed with the board and approval obtained for distribution to senior management
- D . At the board’s discretion, the frequency of external assessments can exceed the five-year guideline
Correct Answer: D
D
Explanation:
According to the IIA guidance, the frequency of external assessments can exceed the five-year guideline at the board’s discretion. This flexibility allows organizations to conduct external quality assessments more frequently than the minimum standard based on their specific needs, risk exposure, or changes in the operating environment, ensuring continuous improvement and adherence to best practices in internal auditing.
Reference: Institute of Internal Auditors (IIA) – International Professional Practices Framework (IPPF)
D
Explanation:
According to the IIA guidance, the frequency of external assessments can exceed the five-year guideline at the board’s discretion. This flexibility allows organizations to conduct external quality assessments more frequently than the minimum standard based on their specific needs, risk exposure, or changes in the operating environment, ensuring continuous improvement and adherence to best practices in internal auditing.
Reference: Institute of Internal Auditors (IIA) – International Professional Practices Framework (IPPF)
Question #137
With regard to IT governance, which of the following is the most effective and appropriate role for the internal audit activity?
- A . Independently evaluate the skills and experience of potential chief information officer candidates to assess the best fit based on the organization’s risk appetite.
- B . Evaluate the organization’s governance standards and assess IT-related activities to identify gaps and develop policies, ensuring alignment with the organization’s risk appetite.
- C . Assist management in interpreting complex IT-related privacy and security risk exposures and evaluating potential mitigation strategies.
- D . Assess whether governance activities are aligned with the organization’s risk appetite and take into consideration emerging risks
Correct Answer: D
D
Explanation:
The most effective and appropriate role for the internal audit activity with regard to IT governance is to assess whether governance activities are aligned with the organization’s risk appetite and take into consideration emerging risks. This role involves evaluating the adequacy and effectiveness of the organization’s IT governance framework, ensuring that IT-related decisions and activities align with strategic objectives and manage IT risks effectively.
Reference: IIA Global Technology Audit Guide (GTAG) on IT Governance
D
Explanation:
The most effective and appropriate role for the internal audit activity with regard to IT governance is to assess whether governance activities are aligned with the organization’s risk appetite and take into consideration emerging risks. This role involves evaluating the adequacy and effectiveness of the organization’s IT governance framework, ensuring that IT-related decisions and activities align with strategic objectives and manage IT risks effectively.
Reference: IIA Global Technology Audit Guide (GTAG) on IT Governance
Question #138
The results of an assessment of the adequacy of controls would be considered incomplete or misleading unless the internal auditor considers which of the following?
- A . Number of mitigating controls.
- B . Effectiveness of the control environment
- C . Use of computer-assisted auditing techniques.
- D . IT security controls
Correct Answer: B
B
Explanation:
The effectiveness of the control environment is a fundamental aspect that internal auditors must consider to ensure a comprehensive assessment of the adequacy of controls. The control environment sets the tone at the top and is the foundation on which the rest of the control structure is built, influencing the effectiveness and robustness of specific controls.
Reference: Institute of Internal Auditors (IIA) – International Standards for the Professional Practice of Internal Auditing
B
Explanation:
The effectiveness of the control environment is a fundamental aspect that internal auditors must consider to ensure a comprehensive assessment of the adequacy of controls. The control environment sets the tone at the top and is the foundation on which the rest of the control structure is built, influencing the effectiveness and robustness of specific controls.
Reference: Institute of Internal Auditors (IIA) – International Standards for the Professional Practice of Internal Auditing
Question #139
According to The IIA’s Code of Ethics, which of the following scenarios offers the best example of violating the principle of integrity?
- A . An internal audit manager collaborates with senior management to provide misleading information to government authorities.
- B . An internal audit manager provides sample audit reports and workpapers to a friend without obtaining prior approval
- C . An internal audit manager carries out a technical audit request without seeking expert opinion, despite a lack of the requisite skills.
- D . An internal audit manager assigned to audit a sales process failed to reveal that the process owner is a relative
Correct Answer: D
D
Explanation:
The scenario where an internal audit manager fails to disclose a conflict of interest by not revealing that the process owner being audited is a relative is a clear violation of the integrity principle outlined in The IIA’s Code of Ethics. Integrity demands that internal auditors disclose all material facts known to them that, if not disclosed, may distort the reporting of activities under review or conceal unlawful practices.
Reference: The IIA’s Code of Ethics
D
Explanation:
The scenario where an internal audit manager fails to disclose a conflict of interest by not revealing that the process owner being audited is a relative is a clear violation of the integrity principle outlined in The IIA’s Code of Ethics. Integrity demands that internal auditors disclose all material facts known to them that, if not disclosed, may distort the reporting of activities under review or conceal unlawful practices.
Reference: The IIA’s Code of Ethics
Question #140
Which of the following statements best describes internal auditors’ role in fraud detection?
- A . Internal auditors’ roles are similar to those performed by loss prevention managers or fraud investigators.
- B . Internal auditors’ demonstration of adequate professional skepticism during an audit engagement is of paramount importance.
- C . Internal auditors should consider fraud risks in every assignment and demonstrate due care by detecting fraud instances.
- D . Internal auditors should possess a fraud-related body of knowledge, enabling them to carry out preventative and detective measures.
Correct Answer: D
D
Explanation:
Given the restrictions on in-person contact due to the global health crisis, a virtual meeting with management to discuss the automobile production process is the most direct and interactive alternative. This approach would allow the internal auditors to ask real-time questions and get insights directly from those who manage and understand the production process, thus compensating for the inability to conduct onsite inspections.
Reference: Institute of Internal Auditors (IIA) – Guidance on Alternative Training Methods during Disruptions.
D
Explanation:
Given the restrictions on in-person contact due to the global health crisis, a virtual meeting with management to discuss the automobile production process is the most direct and interactive alternative. This approach would allow the internal auditors to ask real-time questions and get insights directly from those who manage and understand the production process, thus compensating for the inability to conduct onsite inspections.
Reference: Institute of Internal Auditors (IIA) – Guidance on Alternative Training Methods during Disruptions.