IIA-CIA-Part1 | Updated Certified Internal Auditor - Part 1, The Internal Audit Activitys Role In Governance, Risk, And Control IIA-CIA-Part1 Actual Test

NEW QUESTION 1
According to IIA guidance, which of the following scenarios demonstrates an internal auditor exercising due professional care?
When auditing investments, the auditor identified instruments with which he was unfamiliar. He decided not to select that type of investment in his sample, as he did not have the knowledge needed to

• A. perform a proper assessment.
• B. An auditor was reviewing inventory counts conducted by the warehouse staf
• C. One truck containing an immaterial amount of inventory was off-site and wasn't verified by the auditor.
• D. An auditor visited a plant that produces a significant portion of the organization's inventor
• E. The day he arrived, the plant manager was out sick, so the auditor issued the report without interviewing the manager.
• F. An auditor in charge needed to have testing completed by the end of the month, but was behind schedul
• G. He identified a junior auditor to conduct the work for him on a complex area of the organization.

Answer: A

NEW QUESTION 2
An internal audit activity includes in its audit reports the assertion that its work is performed in conformance with the International Standards for the Professional Practice of Internal Auditing {Standards). A recent external quality assessment concluded that the internal audit activity had substantial deficiencies that impact its overall operations. According to IIA guidance, which of the following is the most appropriate action for issuing future audit reports?

• A. Refrain from indicating that the internal audit activity operates in conformance with the Standards until the chief audit executive confirms that the internal audit activity has addressed all areas of nonconformance and the audit committee has been notified.
• B. Refrain from indicating that the internal audit activity operates in conformance with the Standards until another external assessment confirms that the significant areas of nonconformance have been addressed.
• C. Indicate that the internal audit activity operates in partial conformance with the Standards, as the internal audit activity has a quality assurance and improvement program in place to address deficiencies and has met the requirement for conducting an external assessment.
• D. Update and reissue previous audit reports, removing the assertion that the internal audit activity operates in conformance with the Standards, and distribute them to all parties who received the original reports.

Answer: B

NEW QUESTION 3
According to the COSO enterprise risk management (ERM) framework, which of the following is not part of the new paradigm in ERM?

• A. Assessing the risk factors.
• B. Aligning risk appetite and strategy.
• C. Enhancing risk response decisions.
• D. Reducing operational surprises and losses.

Answer: A

NEW QUESTION 4
Which of the following is a detective control strategy against fraud?

• A. Requiring employees to attend ethics training.
• B. Performing background checks on employees.
• C. Implementing a control self-assessment.
• D. Performing a surprise audit.

Answer: D

NEW QUESTION 5
Who is responsible for setting the risk appetite?

• A. External auditors.
• B. Chief risk officer.
• C. Operations management.
• D. Board of directors.

Answer: D

NEW QUESTION 6
Which of the following best explains why integrity is a necessary personal quality for internal auditors at all levels?

• A. Internal auditor integrity enables stakeholders to constantly question the work of the internal audit activity.
• B. Internal auditor integrity enables the internal auditor to avoid being challenged by any party in the organization.
• C. Internal auditor integrity enables the internal audit activity to be able to demonstrate independence.
• D. Internal auditor integrity enables users of internal auditors' work to make important business decisions.

Answer: D

NEW QUESTION 7
Which of the following actions should the audit committee take to promote organizational independence for the internal audit activity?

• A. Delegate final approval of the risk-based internal audit plan to the chief audit executive (CAE).
• B. Approve the annual budget and resource plan for the internal audit activity.
• C. Assist the CAE with hiring objective and competent internal audit staff.
• D. Encourage the CAE to communicate and coordinate with the external auditor.

Answer: A

NEW QUESTION 8
Which of the following situations is most likely to impair internal audit objectivity?

• A. An internal auditor reports both functionally and administratively to the chief financial officer (CFO).
• B. An internal auditor, who was an accounts receivable intern for the organization three years prior, performs an audit of the accounts receivable cycle.
• C. According to policy, the internal auditor must obtain approval from the CFO prior to requesting information for internal audit purposes.
• D. An internal auditor performs an audit in a department that is led by the auditor's close friend.

Answer: D

NEW QUESTION 9
According to The MA Code of Ethics, which of the following is one of the rules of conduct for objectivity?

• A. Internal auditors shall continually improve their proficiency and effectiveness and quality of their services.
• B. Internal auditors shall respect and contribute to legitimate and ethical objectives of the organization.
• C. Internal auditors shall not accept anything that may impair or be presumed to impair their professional judgment.
• D. Internal auditors shall be prudent in the use and protection of information acquired in the course of their duties.

Answer: C

NEW QUESTION 10
A new internal audit activity is creating its first charter. According to IIA guidance, which of the following objectives would be appropriate for inclusion in the charter?

• A. Continuously monitor the organization's overall risk activities in relation to its risk appetite.
• B. Evaluate the adequacy and effectiveness of the organization's governance activities.
• C. Oversee the establishment and administration of an effective risk management program.
• D. Assist management in implementing recommended control improvements.

Answer: C

NEW QUESTION 11
Which of the following is the most common method of fraud detection?

• A. Analytical reviews of high-risk areas.
• B. Detective controls built into the daily processes.
• C. Unannounced audits or reviews of programs or departments.
• D. Tips received from employees or citizens.

Answer: D

NEW QUESTION 12
According to COSO, which of the following describes a principle related to the control environment?

• A. The organization identifies and assesses changes that could significantly impact the system of internal control.
• B. The organization establishes appropriate authorities and responsibilities in the pursuit of objectives.
• C. The organization selects and develops control activities that contribute to the mitigation of risks.
• D. The organization performs evaluations to ascertain whether internal control components are present and functioning.

Answer: B

NEW QUESTION 13
Which of the following describes a key characteristic related to effective organizational communication?

• A. Comprehensive supervisory and verification procedures.
• B. A well-designed system of internal controls.
• C. A culture of integrity and transparency.
• D. Unique operating environments with varying complexity.

Answer: B

NEW QUESTION 14
Which of the following actions best demonstrates that an internal auditor is exercising due professional care?

• A. The auditor performs thorough reviews and provides absolute assurance of regulatory compliance.
• B. The auditor is alert to the possibility of fraud and activities where irregularities are most likely to occur.
• C. The auditor recommends improvements for all of the organization's procedures and practices.
• D. The auditor is cognizant of reducing travel expenses by combining a personal vacation with a business trip.

Answer: B

NEW QUESTION 15
When auditing the award of a major contract, which of the following should an internal auditor suspect as a red flag for a bidding fraud scheme?
* 1. Subsequent change orders increase requirements for low-bid items.
* 2. Material contract requirements are different on the actual contract than on the request for bids.
* 3. A high percentage of employees are charged to indirect accounts.
* 4. Losing bidders are hired as subcontractors.

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

Answer: D

NEW QUESTION 16
Which of the following statements is true about The IIA Global Internal Audit Competency Framework?

• A. The core competencies outlined in the framework are not expected of a person undertaking an entry-level position as an internal auditor.
• B. The framework is designed to be used primarily by chief audit executives that are developing indicators to measure the performance of the internal audit activity for which they are responsible.
• C. The framework lists the core competencies internal auditors should possess before attempting to attain The IIA's Certified Internal Auditor certification.
• D. The framework describes competencies needed for individual internal auditors, but not those necessary at the chief audit executive level.

Answer: B

NEW QUESTION 17
Which of the following is a requirement for an assurance engagement that may not be for a consulting engagement?

• A. The internal audit activity has to ensure team members' objectivity is not impaired.
• B. Auditors cannot participate in an assurance engagement of a function for which they previously performed a consulting engagement.
• C. The scope and objective of the engagement is agreed upon based on the engagement client's needs.
• D. The internal audit activity must ensure management actions have been implemented effectively or risk accepted.

Answer: B

NEW QUESTION 18
The chief audit executive (CAE) of a small internal audit activity (IAA) performs all high-risk engagements on the annual audit plan to make use of his knowledge and experience and to maximize the efficient use of audit resources. Which of the following statements is most relevant regarding this practice?

• A. The CAE's work may be reviewed by any other experienced staff member within the IAA.
• B. The CAE's work should be reviewed by an individual with the appropriate background and knowledge.
• C. The CAE may self-review his work, provided he discloses this practice in the final report.
• D. The CAE should avoid performing engagements to ensure he is able to review all audit work objectively.

Answer: B

NEW QUESTION 19
An internal auditor is evaluating techniques management uses to mitigate risks within a particular product division. Which of the following is an example of risk reduction?

• A. Management sells the product division to a competitor.
• B. Management outsources the product division to a third party.
• C. Management allows the product division to remain unchanged.
• D. Management modifies the product division to minimize errors.

Answer: D

NEW QUESTION 20
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