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 566 questions

In order to provide the most useful information for an organization's risk management decisions,which of the following should be assessed?

  • A. Risk levels for future events based on the degree of uncertainty of those events and their cost of mitigation.
  • B. Inherent and control risks and their impact on the extent of financial misstatements.
  • C. Risk levels of current and future events,their effect on the achievement of the organization's objectives,and their underlying causes.
  • D. Risk levels of current and future events,their impact on the organization's mission,and the potential for the elimination of existing risk factors.


Answer : C

In publicly held companies,management often requires the internal audit activity's involvement with quarterly financial statements that are made public and used internally.
Which of the following is generally not a reason for such involvement?

  • A. Management may be concerned about its reputation in the financial markets.
  • B. Management may be concerned about potential penalties that could occur if quarterly financial statements are misstated.
  • C. The Standards state that internal auditors should be involved with reviewing quarterly financial statements.
  • D. Management may perceive that having quarterly financial information examined by the internal auditors enhances its value for internal decision making.


Answer : C

According to the Standards,the organizational status of the internal audit activity:

  • A. Must be sufficient to permit the accomplishment of its audit responsibilities.
  • B. Is best when the reporting relationship is direct to the board of directors.
  • C. Requires the board's annual approval of the audit schedules,plans,and budgets.
  • D. Is guaranteed when the charter specifically defines its independence.


Answer : A

Which of the following measurements could an auditor use in an audit of the efficiency of a motor vehicle inspection facility?

  • A. The total number of cars approved.
  • B. The ratio of cars rejected to total cars inspected.
  • C. The number of cars inspected per inspection agent.
  • D. The average amount of fees collected per cashier.


Answer : C

The chief audit executive should periodically report the internal audit activity's purpose,authority,responsibility,and performance,as well as significant risk exposures and control issues,to which of the following?
I. Board of directors.
II.Senior management.
III.Shareholders.
IV.External auditors.

  • A. IIonly
  • B. I and IIonly
  • C. I,II,and IIIonly
  • D. I,III,and IVonly


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

Which of the following best describes the underlying premise of the COSO enterprise risk management framework?

  • A. Management should set objectives before assessing risk.
  • B. Every entity exists to provide value for its stakeholders.
  • C. Policies are established to ensure that risk responses are performed effectively.
  • D. Enterprise risk management can minimize the impact and likelihood of unanticipated events.


Answer : B

Which of the following is a role of the board of directors in the governance process?

  • A. Conduct periodic assessments of the organization's governance systems.
  • B. Obtain assurance concerning the effectiveness of the organization's governance systems.
  • C. Implement an effective system of internal controls to support the organization's governance systems.
  • D. Review and approve operational goals and objectives.


Answer : B

Which of the following should be incorporated in a risk management policy?
I.Boundaries and limit structures.
II.Requirements for reporting risk.
III.Risk authorities.

  • A. I and IIonly
  • B. I and IIIonly
  • C. II and IIIonly
  • D. I,II,and III.


Answer : D

Which of the following actions would be considered a violation of the Standards?
I.Drafts of engagement communications were reviewed with the audit client to obtain input.
The client's comments were considered when developing the engagement final communication.
II.An auditor participated as part of a development team to review the control procedures to be incorporated into a major computer application under development.
III.Given limited resources,the chief audit executive performed a risk analysis to determine which functions to audit.

  • A. IIonly
  • B. I and IIIonly
  • C. I,II,and III.
  • D. None of the above.


Answer : D

A charitable organization provides substantial grants for important medical research.
Assuming marginal controls are in place,which of the following possible frauds or misuses of organization assets should be considered the area of greatest risk?

  • A. Senior executives are using company travel and entertainment funds for activities that might be considered questionable.
  • B. Purchases of office supplies are made from fictitious vendors.
  • C. Grants are made to organizations associated with senior executives.
  • D. A payroll clerk has added a fictitious employee.


Answer : C

Which of the following is not an appropriate type of coordination between the internal audit activity and regulatory auditors?

  • A. Regulatory auditors share their perspective on risk management,control,and governance with the internal auditors.
  • B. Internal auditors perform fieldwork at the direction of the regulatory auditors.
  • C. Internal auditors review copies of regulatory reports in planning related internal engagements.
  • D. Regulatory and internal auditors exchange information about planned activities.


Answer : B

An organization that outsources much of its internal audit work to an external service provider is planning for an external quality assessment. Which of the following options would accomplish this task and be in conformance with the Standards?

  • A. External industry associate that performed a similar review for a supplier of the organization.
  • B. A team from an independent entity that previously employed the chief audit executive of the organization.
  • C. A team under the direction of the organization's chief audit executive with validation by a former manager of the internal audit activity.
  • D. The same external service provider because of its competency and experience with the organization.


Answer : A

In order to exercise due professional care as defined in the International Professional
Practices Framework,an internal auditorshould:
I.Consider the probability of significant noncompliance in each audit engagement.
II.Perform assurance procedures with sufficient care to ensure that all risks are identified.
III.Weigh the cost of assurance against the benefits.

  • A. I and IIonly
  • B. I and IIIonly
  • C. II and IIIonly
  • D. I,II,and III.


Answer : B

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 566 questions