Practice Free IIA-CIA-Part1 Exam Online Questions
Question #141
A chief audit executive added more money to the IT training budget to ensure the organization’s internal auditors were able to perform data analytics while performing an audit.
Which core competency is being addressed?
- A . Data analytics
- B . IT fraud detection.
- C . Continuing professional development
- D . Due professional care.
Correct Answer: C
C
Explanation:
By adding more money to the IT training budget to ensure that internal auditors can perform data analytics, the chief audit executive is addressing the core competency of continuing professional development. Ensuring that auditors have the necessary skills and knowledge to perform advanced audit techniques, such as data analytics, is a critical aspect of their ongoing professional development. This investment helps auditors stay current with emerging technologies and methodologies, enhancing their overall effectiveness and the value they provide to the organization.
Reference: The IIA Standards: Standard 1230 C Continuing Professional Development: "Internal auditors must enhance their knowledge, skills, and other competencies through continuing professional development."
IIA Practice Guide: "Developing an Internal Audit Training Program": Discusses the importance of ongoing training and development to maintain auditor proficiency and effectiveness.
C
Explanation:
By adding more money to the IT training budget to ensure that internal auditors can perform data analytics, the chief audit executive is addressing the core competency of continuing professional development. Ensuring that auditors have the necessary skills and knowledge to perform advanced audit techniques, such as data analytics, is a critical aspect of their ongoing professional development. This investment helps auditors stay current with emerging technologies and methodologies, enhancing their overall effectiveness and the value they provide to the organization.
Reference: The IIA Standards: Standard 1230 C Continuing Professional Development: "Internal auditors must enhance their knowledge, skills, and other competencies through continuing professional development."
IIA Practice Guide: "Developing an Internal Audit Training Program": Discusses the importance of ongoing training and development to maintain auditor proficiency and effectiveness.
Question #142
An engagement supervisor obtains facilities maintenance reports from a contractor during an audit of third-party services.
Which of the following is the source of authority for the engagement supervisor to make such contact outside the organization?
- A . The policies and procedures of the internal audit activity.
- B . The provisions of the internal audit charter.
- C . The authority of the CEO.
- D . The IIA’s Code of Ethics.
Correct Answer: B
B
Explanation:
The source of authority for an engagement supervisor to make contact with external parties, such as obtaining maintenance reports from a contractor, typically comes from the provisions outlined in the internal audit charter. This charter formally defines the purpose, authority, and responsibility of the internal audit activity, including interactions with third-party service providers. It is essential as it sets the audit activity’s scope, allowing auditors to access necessary information and resources.
Reference: The Institute of Internal Auditors (IIA) – International Professional Practices Framework (IPPF), specifically the Audit Charter guidelines.
B
Explanation:
The source of authority for an engagement supervisor to make contact with external parties, such as obtaining maintenance reports from a contractor, typically comes from the provisions outlined in the internal audit charter. This charter formally defines the purpose, authority, and responsibility of the internal audit activity, including interactions with third-party service providers. It is essential as it sets the audit activity’s scope, allowing auditors to access necessary information and resources.
Reference: The Institute of Internal Auditors (IIA) – International Professional Practices Framework (IPPF), specifically the Audit Charter guidelines.
Question #143
Which of the following parties would be responsible for ongoing monitoring of the organization’s corporate social responsibility activities to reduce its carbon footprint?
- A . Chief audit executive
- B . Facility operation manager
- C . Public relations manager
- D . Regulatory agency
Correct Answer: B
B
Explanation:
While the internal audit may be involved in assessing the adequacy of the organization’s efforts in corporate social responsibility (CSR), the primary responsibility for ongoing monitoring of CSR activities, such as reducing carbon footprint, typically rests with operational management. In this context, the Facility Operation Manager would be the most appropriate choice, as they are directly involved in managing the day-to-day operations that affect the organization’s environmental impact.
Reference: General industry practices on CSR responsibilities
B
Explanation:
While the internal audit may be involved in assessing the adequacy of the organization’s efforts in corporate social responsibility (CSR), the primary responsibility for ongoing monitoring of CSR activities, such as reducing carbon footprint, typically rests with operational management. In this context, the Facility Operation Manager would be the most appropriate choice, as they are directly involved in managing the day-to-day operations that affect the organization’s environmental impact.
Reference: General industry practices on CSR responsibilities
Question #144
Which of the following best demonstrates organizational independence of the internal audit activity?
- A . The chief audit executive (CAE) reports functionally to the CEO.
- B . The CAE’s compensation is approved by the chief financial officer.
- C . The CAE’s appointment Is determined by the CEO
- D . The CAE reports administratively to the chief operating officer.
Correct Answer: A
A
Explanation:
Organizational independence of the internal audit activity is best demonstrated when the CAE reports functionally to the highest levels within the organization, such as the CEO or directly to the board. Functional reporting involves matters such as audit plans, frequencies, reporting, and budgeting, and it is crucial for ensuring that the internal audit function has the necessary authority and independence from management, which could influence their activities.
Reference: Institute of Internal Auditors (IIA) – International Standards for the Professional Practice of
Internal Auditing
Top of Form
A
Explanation:
Organizational independence of the internal audit activity is best demonstrated when the CAE reports functionally to the highest levels within the organization, such as the CEO or directly to the board. Functional reporting involves matters such as audit plans, frequencies, reporting, and budgeting, and it is crucial for ensuring that the internal audit function has the necessary authority and independence from management, which could influence their activities.
Reference: Institute of Internal Auditors (IIA) – International Standards for the Professional Practice of
Internal Auditing
Top of Form
Question #145
According to IIA guidance, which of the following is an appropriate role for the internal audit activity?
- A . Coaching management in responding to risks.
- B . Implementing risk responses on management’s behalf.
- C . Imposing risk management processes.
- D . Setting the risk appetite.
Correct Answer: A
A
Explanation:
According to IIA guidance, an appropriate role for the internal audit activity includes coaching management in responding to risks. This involves providing advice, facilitating workshops, and sharing best practices to help management identify, assess, and mitigate risks effectively. Internal auditors can offer insights and recommendations based on their evaluations but should not take on management responsibilities.
Implementing risk responses on management’s behalf (B), imposing risk management processes (C), and setting the risk appetite (D) are not appropriate roles for internal auditors, as these activities fall within the purview of management. The internal audit function should maintain its independence and objectivity while supporting and enhancing the organization’s risk management efforts.
Reference: IIA Position Paper: The Role of Internal Auditing in Enterprise-Wide Risk Management
IIA Standard 2120: Risk Management
A
Explanation:
According to IIA guidance, an appropriate role for the internal audit activity includes coaching management in responding to risks. This involves providing advice, facilitating workshops, and sharing best practices to help management identify, assess, and mitigate risks effectively. Internal auditors can offer insights and recommendations based on their evaluations but should not take on management responsibilities.
Implementing risk responses on management’s behalf (B), imposing risk management processes (C), and setting the risk appetite (D) are not appropriate roles for internal auditors, as these activities fall within the purview of management. The internal audit function should maintain its independence and objectivity while supporting and enhancing the organization’s risk management efforts.
Reference: IIA Position Paper: The Role of Internal Auditing in Enterprise-Wide Risk Management
IIA Standard 2120: Risk Management
Question #146
According to the Standards, in today’s technology and business environments, how much computer and information systems-related knowledge and skills must an internal auditor have to be effective in fulfilling his job responsibilities?
- A . Auditors must have an IT specialty in at least one of their organization’s key information technology systems.
- B . Auditors must be proficient in data analysis and computer assisted audit techniques for their organization.
- C . Auditors must understand their organization’s integrated test facilities and generalized audit software.
- D . Auditors must understand their organization’s IT governance, risk, and control processes.
Correct Answer: D
D
Explanation:
Similar to Question 701, the IIA Standards emphasize that internal auditors must understand their organization’s IT governance, risk, and control processes to be effective in their roles (Option D). The understanding of these elements is crucial in today’s technology-driven business environments, as it enables auditors to assess and provide assurance on the effectiveness of the organization’s IT-related controls and risk management processes.
Reference: IIA Standards, Standard 1210.A3: Proficiency – Technology-based Audit Techniques IIA’s International Professional Practices Framework (IPPF)
D
Explanation:
Similar to Question 701, the IIA Standards emphasize that internal auditors must understand their organization’s IT governance, risk, and control processes to be effective in their roles (Option D). The understanding of these elements is crucial in today’s technology-driven business environments, as it enables auditors to assess and provide assurance on the effectiveness of the organization’s IT-related controls and risk management processes.
Reference: IIA Standards, Standard 1210.A3: Proficiency – Technology-based Audit Techniques IIA’s International Professional Practices Framework (IPPF)
Question #147
According to IIA guidance, which of the following statements is true regarding the internal audit activity’s responsibilities in providing consulting services?
- A . The chief audit executive is responsible for deciding the priority of consulting services in the internal audit plan
- B . The scope of consulting services is determined primarily by the internal auditor with input from management of the area under review
- C . The board defines the internal audit activity’s responsibilities over consulting activities
- D . Adding value to an organization requires the internal audit activity to initiate a consulting engagement
Correct Answer: C
C
Explanation:
According to the Institute of Internal Auditors (IIA) standards and guidance, the board of an organization defines the overall responsibilities and expectations of the internal audit activity, including its role in providing consulting services. This oversight aligns with the governance role of the board to ensure that the internal audit activity conforms to the standards and adds value to the organization. The internal audit activity may provide consulting services that are advisory in nature and agreed upon with management, but it is the board that sets the overarching governance framework.
Reference: Institute of Internal Auditors (IIA) – International Professional Practices Framework (IPPF)
C
Explanation:
According to the Institute of Internal Auditors (IIA) standards and guidance, the board of an organization defines the overall responsibilities and expectations of the internal audit activity, including its role in providing consulting services. This oversight aligns with the governance role of the board to ensure that the internal audit activity conforms to the standards and adds value to the organization. The internal audit activity may provide consulting services that are advisory in nature and agreed upon with management, but it is the board that sets the overarching governance framework.
Reference: Institute of Internal Auditors (IIA) – International Professional Practices Framework (IPPF)
Question #148
Identify and mitigate risks to help meet the CSR program objectives.
- A . 1,2, and 3,
- B . 1 2, and 4.
- C . 1, 3, and 4.
- D . 2, 3, and 4.
Correct Answer: B
B
Explanation:
According to IIA guidance, the internal audit activity can consult on CSR program design and implementation, serve as an advisor on CSR governance and risk management, and identify and mitigate risks to help meet the CSR program objectives. These roles enable the internal audit to add value through both advisory and assurance services regarding CSR, aligning with their expertise in governance, risk management, and control.
Reference: IIA guidance on the role of internal auditing in corporate social responsibility; Standards on advisory services.
B
Explanation:
According to IIA guidance, the internal audit activity can consult on CSR program design and implementation, serve as an advisor on CSR governance and risk management, and identify and mitigate risks to help meet the CSR program objectives. These roles enable the internal audit to add value through both advisory and assurance services regarding CSR, aligning with their expertise in governance, risk management, and control.
Reference: IIA guidance on the role of internal auditing in corporate social responsibility; Standards on advisory services.
Question #149
What should the chief audit executive do when the internal audit activity is found to be in nonconformance with the Code of Ethics or the Standards?
- A . Assign competent staff to the area under audit to remediate the nonconformance.
- B . Determine how the deviation impacted the overall scope of the internal audit activity.
- C . Meet with the board to gam an understanding of the board’s expectations.
- D . Communicate the matter to the board at the time of the next external assessment.
Correct Answer: D
D
Explanation:
When the internal audit activity is found to be in nonconformance with the Code of Ethics or the Standards, the chief audit executive should communicate this matter to the board at the time of the next external assessment. This ensures that the board is aware of the nonconformance and can take appropriate actions to address the issue, maintaining the integrity and accountability of the internal audit function.
Reference: IIA standards on governance, which require the chief audit executive to report significant issues related to nonconformance with professional standards and the Code of Ethics to the board and senior management.
D
Explanation:
When the internal audit activity is found to be in nonconformance with the Code of Ethics or the Standards, the chief audit executive should communicate this matter to the board at the time of the next external assessment. This ensures that the board is aware of the nonconformance and can take appropriate actions to address the issue, maintaining the integrity and accountability of the internal audit function.
Reference: IIA standards on governance, which require the chief audit executive to report significant issues related to nonconformance with professional standards and the Code of Ethics to the board and senior management.
Question #150
Management would like to self-assess the overall effectiveness of the controls in place for its 200-person manufacturing department.
Which of the following client-facilitated approaches is likely to be the most efficient way to accomplish this objective?
- A . Workshops.
- B . Surveys.
- C . Interviews.
- D . Observation.
Correct Answer: A
A
Explanation:
Workshops are likely the most efficient way for management to self-assess the overall effectiveness of the controls in a 200-person manufacturing department. Workshops can facilitate interactive discussions and group activities that help identify control gaps, understand employee perspectives, and consolidate feedback effectively across a large group.
Reference: Best practices in internal control assessments and organizational development literature.
A
Explanation:
Workshops are likely the most efficient way for management to self-assess the overall effectiveness of the controls in a 200-person manufacturing department. Workshops can facilitate interactive discussions and group activities that help identify control gaps, understand employee perspectives, and consolidate feedback effectively across a large group.
Reference: Best practices in internal control assessments and organizational development literature.