Practice Free IIA-CIA-Part1 Exam Online Questions
An organization’s board of directors has decided that the internal audit activity must have greater access to different pans of the organization in order to perform their assurance work effectively
Which of the following areas is the board seeking to improve by making this change?
- A . Internal audit authority.
- B . Internal audit reporting structure.
- C . Internal audit independence and objectivity.
- D . Internal audit interaction with the board
A
Explanation:
By deciding that the internal audit activity must have greater access to different parts of the organization, the board of directors is primarily seeking to improve the internal audit authority. This change aims to empower the internal audit activity with the necessary access to records, personnel, and physical properties to conduct thorough and effective assurance work, thereby enhancing the scope and depth of audits.
Reference: Institute of Internal Auditors (IIA) – International Professional Practices Framework (IPPF)
Which of the following statements would typically be included in the responsibility section of the internal audit charter?
- A . The internal audit activity will have free and unrestricted access to the chief executive officer, audit committee, and chairman of the board of directors.
- B . The internal audit activity shall develop a flexible audit plan, based on a risk assessment conducted at least annually and taking into consideration the risks or control concerns identified by management, and shall submit the plan to the board for approval.
- C . The chief audit executive shall obtain the necessary assistance of personnel in areas where audits are performed, as well as specialized services within or outside of the organization.
- D . The internal audit activity will not implement controls, develop procedures, install systems, prepare records, or engage in activities that may impair internal auditors’ judgments.
B
Explanation:
The statement that the internal audit activity shall develop a flexible audit plan based on risk assessment and submit this plan to the board for approval is typically found in the responsibilities section of the internal audit charter. This element emphasizes the planning aspect of audit activities, showcasing the audit’s alignment with organizational risks and the governance structure’s oversight.
Reference: IIA’s International Standards for the Professional Practice of Internal Auditing
A business unit manager was impressed by the competence of the internal auditor who was conducting an assurance engagement in his area and the manager made the auditor an attractive job offer to begin after the audit was completed. The auditor later told her auditor in charge that she was considering the offer.
Which of the following IIA Code of Ethics principles was most likely violated?
- A . Integrity
- B . Confidentiality
- C . Objectivity
- D . No violation was committed
C
Explanation:
The principle most likely violated in this scenario is objectivity. According to the IIA Code of Ethics, internal auditors must maintain an unbiased and impartial mindset in all aspects of their engagements. By considering a job offer from a business unit manager involved in an audit, the auditor risks compromising her ability to remain objective both during and after the audit process. This situation creates a conflict of interest that can influence the auditor’s judgments, potentially leading to bias in audit findings or decisions.
Reference: The Institute of Internal Auditors (IIA) – Code of Ethics
A business unit manager was impressed by the competence of the internal auditor who was conducting an assurance engagement in his area and the manager made the auditor an attractive job offer to begin after the audit was completed. The auditor later told her auditor in charge that she was considering the offer.
Which of the following IIA Code of Ethics principles was most likely violated?
- A . Integrity
- B . Confidentiality
- C . Objectivity
- D . No violation was committed
C
Explanation:
The principle most likely violated in this scenario is objectivity. According to the IIA Code of Ethics, internal auditors must maintain an unbiased and impartial mindset in all aspects of their engagements. By considering a job offer from a business unit manager involved in an audit, the auditor risks compromising her ability to remain objective both during and after the audit process. This situation creates a conflict of interest that can influence the auditor’s judgments, potentially leading to bias in audit findings or decisions.
Reference: The Institute of Internal Auditors (IIA) – Code of Ethics
Which of the following describes the primary objective when implementing a risk management framework?
- A . To achieve planned profitability for business expansion.
- B . To enhance an organization’s confidence in achieving strategy.
- C . To strengthen corporate governance standards.
- D . To eliminate business risks and uncertainties.
B
Explanation:
The primary objective when implementing a risk management framework is to enhance an organization’s confidence in achieving its strategy. A risk management framework helps an organization identify, assess, and manage risks that could impact its ability to achieve strategic objectives. By systematically managing risks, the organization can make informed decisions, allocate resources more effectively, and improve its overall resilience, thus increasing confidence in achieving its strategic goals.
Reference: COSO’s Enterprise Risk Management C Integrating with Strategy and Performance.
The IIA’s Practice Guide on Risk Management.
During an assurance engagement internal auditors interview operational management to gather and evaluate information.
Which approach is most important for internal auditors to be able to listen effectively to interviewees in the given situation?
- A . Make an audio recording of the interview
- B . Interrupt with questions during unclear statements
- C . Express interest by asking follow-up questions
- D . Avoid periods of silence
C
Explanation:
During interviews, it is crucial for internal auditors to demonstrate active listening and engagement with the interviewee to gather comprehensive and accurate information. Expressing interest by asking follow-up questions is an effective way to clarify and delve deeper into responses, ensuring a thorough understanding of the topics discussed. This approach not only helps in collecting valuable data but also in building rapport and trust with interviewees.
Reference: The Institute of Internal Auditors (IIA) – Practice Advisories on Effective Interviewing Techniques
A whistleblower reveals to the chief audit executive (CAE) detailed allegations of potential fraud at the senior management level. Although the CAE has some experience in the area, she chooses to retain an external fraud expert to conduct the investigation.
When asked by the director of finance to defend the expenditure, which of the following statements represents the CAE’s best response?
- A . The CAE refers to the Standards and explains that to protect her independence, she needs to remain isolated from the investigation.
- B . The CAE refers to the Standards and explains that the internal audit activity must obtain competent assistance if needed.
- C . The CAE refers to the Standards and explains that to protect her objectivity, she needs to remain isolated from the investigation.
- D . The CAE describes the specifics of the allegation to underscore the importance of the situation and the need for expert investigation
B
Explanation:
According to the IIA Standards, the chief audit executive (CAE) must ensure that internal audit activities are performed with competence and due professional care. If the internal audit team lacks the necessary knowledge or skills to perform all or part of the work, the CAE must obtain competent advice and assistance. Thus, the CAE’s best response to defend the expenditure for an external fraud expert is to refer to the Standards, explaining that the internal audit activity must obtain competent assistance if needed to ensure the investigation is conducted effectively and professionally.
Reference: IIA Standard 1210: Proficiency
Which data analytics competency is critical for new internal auditors to possess in order to plan and perform internal audit engagements in conformance with the Standards?
- A . Describe data analytics and the application of data analytics methods in internal auditing.
- B . Apply data analytics methods in internal auditing.
- C . Evaluate the use of data analytics in an internal audit.
- D . Understand the definition of data analytics only.
B
Explanation:
It is critical for new internal auditors to possess the competency to apply data analytics methods in internal auditing. This involves not just understanding or describing these methods, but actively utilizing them to enhance the planning and performance of internal audit engagements, thereby ensuring these engagements conform to the Standards.
Reference: The IIA’s competency framework for internal auditors, which emphasizes the application of data analytics in audit practices.
Which of the following is an example of a risk avoidance strategy?
- A . Hedging against exchange rate variations.
- B . Limiting access to an organization’s data center.
- C . Selling a nonstrategic business unit.
- D . Outsourcing a high-risk activity
C
Explanation:
Selling a nonstrategic business unit is an example of a risk avoidance strategy. By divesting from parts of the business that are not core to its strategic objectives or that may represent heightened risks, an organization effectively avoids the risks associated with maintaining those operations.
Reference: Risk management strategies and definitions as provided in risk management and internal audit literature, which categorize selling non-core units as avoidance since it eliminates specific risks.
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 advisor 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.
A
Explanation:
To ensure compliance with an organization’s code of conduct, the chief audit executive should act as an advisor to the committee responsible for reviewing violations of the code. This role allows the CAE to contribute expertise and oversight without directly managing the process, which helps maintain the necessary independence and objectivity of the internal audit function.
Reference: IIA guidance on the role of the internal audit in governance, particularly relating to compliance with codes of conduct.