Practice Free IIA-CIA-Part1 Exam Online Questions
Question #241
Which of the following internal control components has COSO identified as the most important?
- A . Information and communication
- B . Risk assessment
- C . Control activities
- D . Control environment
Correct Answer: D
D
Explanation:
According to the COSO framework, the ‘Control Environment’ is identified as the most important component of internal control. It sets the tone of an organization, influencing the control consciousness of its people. It is the foundation for all other components of internal control, providing discipline and structure.
Reference: COSO’s "Internal Control―Integrated Framework" outlines the importance and priority of each component of internal control, emphasizing the control environment as foundational.
D
Explanation:
According to the COSO framework, the ‘Control Environment’ is identified as the most important component of internal control. It sets the tone of an organization, influencing the control consciousness of its people. It is the foundation for all other components of internal control, providing discipline and structure.
Reference: COSO’s "Internal Control―Integrated Framework" outlines the importance and priority of each component of internal control, emphasizing the control environment as foundational.
Question #242
In the COSO internal control framework, which of the following components serves as the foundation for the other components?
- A . Control activities.
- B . Control environment.
- C . Risk assessment.
- D . Monitoring
Correct Answer: B
B
Explanation:
In the COSO internal control framework, the Control Environment component serves as the foundation for the other components. It sets the tone of an organization, influencing the control consciousness of its people. It is the basis for all other components of internal control, providing discipline and structure. The control environment includes the integrity, ethical values, and competence of the entity’s people; management’s philosophy and operating style; the way management assigns authority and responsibility, and organizes and develops its people; and the attention and direction provided by the board of directors.
Reference: COSO Framework on Internal Control.
B
Explanation:
In the COSO internal control framework, the Control Environment component serves as the foundation for the other components. It sets the tone of an organization, influencing the control consciousness of its people. It is the basis for all other components of internal control, providing discipline and structure. The control environment includes the integrity, ethical values, and competence of the entity’s people; management’s philosophy and operating style; the way management assigns authority and responsibility, and organizes and develops its people; and the attention and direction provided by the board of directors.
Reference: COSO Framework on Internal Control.
Question #243
Evidence discovered during the course of an engagement suggests that multiple incidents of fraud have occurred. There do not appear to be sufficient controls in place to prevent reoccurrence.
Which of the following is the internal auditor’s most appropriate next step?
- A . Immediately notify management of the area under review and the other internal auditors involved in the engagement.
- B . Discuss the situation with the engagement supervisor to determine whether fraud investigation experts are required to investigate the matter properly.
- C . Fully document in the workpapers the evidence that has been discovered and recommend appropriate controls to address the fraud.
- D . Provide the evidence that was discovered to local law enforcement for possible prosecution of the suspected fraud.
Correct Answer: B
B
Explanation:
When evidence of multiple incidents of fraud is discovered and there are insufficient controls in place, the internal auditor’s most appropriate next step is to discuss the situation with the engagement supervisor to determine whether fraud investigation experts are needed. This step ensures that specialized expertise is considered and engaged if necessary to properly investigate the matter and to determine the appropriate response, including the potential involvement of law enforcement.
Reference: International Standards for the Professional Practice of Internal Auditing on responding to findings and incidents of fraud; guidance on fraud investigation.
B
Explanation:
When evidence of multiple incidents of fraud is discovered and there are insufficient controls in place, the internal auditor’s most appropriate next step is to discuss the situation with the engagement supervisor to determine whether fraud investigation experts are needed. This step ensures that specialized expertise is considered and engaged if necessary to properly investigate the matter and to determine the appropriate response, including the potential involvement of law enforcement.
Reference: International Standards for the Professional Practice of Internal Auditing on responding to findings and incidents of fraud; guidance on fraud investigation.