Certified Internal Auditor - Part 1,The Internal Audit Activity's Role in Governance,Risk,and Control v8.0 (IIA-CIA-Part1)

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Total 806 questions

In a manufacturing organization, all sales prices are determined centrally and are electronically sent to the distribution centers to update their sales price tables.
Any pricing deviations must be approved by central headquarters. To determine how this process is functioning, an internal auditor should:

  • A. Document the flow of sales price information, and determine how the table is accessed and updated.
  • B. Develop a flowchart of the sales order process to determine how orders are taken and priced.
  • C. Identify who approves the shipment of goods and how the goods are priced.
  • D. Obtain a copy of the existing flowchart for the computer program to determine how price data are accessed.


Answer : A

It would be appropriate for an internal audit activity to use consultants with expertise in health-care benefits when the internal audit activity is:
I. Conducting an audit of the organization's estimate of its liability for post retirement benefits, which include health care benefits.
II. Comparing the cost of the organization's health care program with that of other programs offered in the industry.
III. Training its staff to conduct an audit of health care costs in a major division of the organization.

  • A. I only
  • B. I and III only
  • C. II and III only
  • D. I, II, and III.


Answer : D

To assure that the technical proficiency of internal auditors is appropriate for the audit engagements to be performed, a chief audit executive should:

  • A. Consider the scope of work and level of responsibility when establishing criteria for education and experience in filling internal auditing positions.
  • B. Ensure that each newly hired auditor is qualified in all of the disciplines needed to accomplish the department's audit mission.
  • C. Oversee a training program that matches the actual training provided with the interests of individual auditors.
  • D. Require all of the audit staff to pursue a minimum number of continuing professional education hours each year.


Answer : A

Which of the following best describes the most important criteria when assigning responsibility for specific tasks required in an audit engagement?

  • A. Auditors must be given assignments based primarily upon their years of experience.
  • B. All auditors assigned an audit task must have the knowledge and skills necessary to complete the task satisfactorily.
  • C. Tasks must be assigned to the audit team member who is most qualified to perform them.
  • D. All audit team members must have the skills necessary to satisfactorily complete any task that will be required in the audit engagement.


Answer : B

In advance of a preliminary survey, a chief audit executive sends a memorandum and questionnaire to the supervisors of the department to be audited. What is the most likely result of that procedure?

  • A. It creates apprehension about the audit engagement.
  • B. It involves the engagement client's supervisory personnel in the audit.
  • C. It is an uneconomical approach to obtaining information.
  • D. It is only useful for audits of distant locations.


Answer : B

Which of the following steps would not be included in a program of selecting and developing human resources for an internal audit department?

  • A. Scheduling periodic meetings with individual auditors, during which the chief audit executive provides counsel regarding each auditor's performance and professional career development.
  • B. Establishing an internal review team to assess the auditors' and audit department's compliance with standards, level of audit effectiveness, and compliance with departmental policy.
  • C. Developing specific job descriptions for audit staff, audit managers, and other auditing positions.
  • D. Establishing in-house training programs and requiring continuing education for audit staff.


Answer : B

Auditors 1, 2, and 3 work out of various offices. Each must be assigned to one, and only one, of three audit locations (A, B, or C). The cost of sending each auditor to each location is listed below:

Audit Locations -

Auditor 1 -

A -

B -

C -

Auditor 2 -
$200
$300
$400

Auditor 3 -
$400
$300
$600

Auditor 4 -
$200
$200
$500
The minimum cost with which this assignment can be accomplished is:

  • A. $800
  • B. $900
  • C. $1, 000
  • D. $1, 100


Answer : B

An audit of the quality control department is being planned. Which of the following would least likely be used in the preparation of a preliminary survey questionnaire?

  • A. An analysis of quality control documents.
  • B. The permanent audit file.
  • C. The prior audit report.
  • D. Management's charter for the quality control department.


Answer : A

An objective for an audit of a medical research corporation is to evaluate management's controls to ensure that timely reports are submitted to sponsors of contracted research projects. In planning the audit to achieve this objective, the auditor should begin by:

  • A. Reviewing policies and procedures.
  • B. Interviewing a group of research managers.
  • C. Observing report preparation in a number of laboratories.
  • D. Sending a questionnaire to a sample of research sponsors.


Answer : A

Which of the following internal control weaknesses would an auditor most likely detect while reviewing a flowchart that depicts the purchasing function of an organization?

  • A. Purchasing policies have not been updated.
  • B. The organization is not taking advantage of quantity discounts available from its suppliers.
  • C. Payments for goods received have not been authorized at the appropriate level.
  • D. Payments to suppliers are made before goods are received.


Answer : D

Which source of audit evidence would provide the least value in flowcharting an organization's purchasing process?

  • A. An interview with the purchasing supervisor.
  • B. A review of a sample of purchase orders which were completed during the last month.
  • C. A review of the purchasing policies and procedures manual.
  • D. A walk-through of the process with a member of the purchasing staff.


Answer : B

Internal auditors exercise judgment about the type and amount of information to be collected. The primary purpose of this judgment is to:

  • A. Eliminate the risk of drawing incorrect conclusions.
  • B. Minimize the cost of the audit engagement.
  • C. Comply with the Standards.
  • D. Provide a sound basis for audit observations and recommendations.


Answer : D

Which of the following is a benefit from reduced testing during a particular phase of an audit engagement?

  • A. The size of the internal audit activity can be reduced.
  • B. There is less concern about assessing inherent risk.
  • C. The level of planned audit risk is lowered.
  • D. Additional audit hours are available for pursuing other engagement objectives.


Answer : D

Which of the following would be the least desirable criteria against which to judge current operations of a company's treasury function?

  • A. The operations of the treasury function as documented during the last audit engagement.
  • B. Company policies and procedures delegating authority and assigning responsibilities.
  • C. Finance textbook illustrations of generally accepted good treasury function practices.
  • D. Codification of best practices of the treasury function in relevant industries.


Answer : A

A bakery chain has a statistical model that can be used to predict daily sales at individual stores based on a direct relationship to the cost of ingredients used and an inverse relationship to rainy days. What conditions would an auditor look for as an indicator of employee theft of food from a specific store?

  • A. On a rainy day, total sales are greater than expected when compared to the cost of ingredients used.
  • B. On a sunny day, total sales are less than expected when compared to the cost of ingredients used.
  • C. Both total sales and cost of ingredients used are greater than expected.
  • D. Both total sales and cost of ingredients used are less than expected.


Answer : B

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Total 806 questions