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UPDATED IIA IIA-CIA-Part1 Exam Questions & Answer
NEW QUESTION # 138
Which of the following audit activities is within the scope of assurance activities as stated in the International Professional Practices Framework?
- A. Assess financing alternatives for a new generator.
- B. Review a make-or-buy decision and report a recommendation to management for approval.
- C. Perform an evaluation of management's planning process.
- D. Participate in negotiations for a corporate acquisition.
Answer: C
NEW QUESTION # 139
The chief audit executive (CAE) has decided to outsource an audit of the organization's cloud governance in the annual audit plan. Why would the CAE outsource this audit?
- A. Lack of due professional care.
- B. Lack of internal assessments.
- C. Lack of audit planning.
- D. Lack of internal audit staff proficiency.
Answer: D
NEW QUESTION # 140
Which of the following scenarios best illustrates the concept of due professional care?
- A. As head of the internal audit activity, the chief audit executive ensures that engagement supervisors conduct post-engagement staff meetings.
- B. After conducting an audit based upon a predefined scope and objective, the internal auditor guaranteed management that the system of internal controls in an audited area operates effectively.
- C. As head of the internal audit activity, the chief audit executive reported functionally to the organization's board and administratively to senior management.
- D. After establishing engagement objectives and reviewing a process, the internal auditor assured process owners that all significant risk events were identified and tested using a systematic, disciplined approach.
Answer: D
NEW QUESTION # 141
According to IIA guidance, which of the following corporate social responsibility (CSR) evaluation activities may be performed by the internal audit activity?
1. Consult on CSR program design and implementation.
2. Serve as an advisor on CSR governance and risk management.
3. Review third parties for contractual compliance with CSR terms.
4. Identify and mitigate risks to help meet the CSR program objectives.
- A. 1 2, and 4.
- B. 2, 3, and 4.
- C. 1, 3, and 4.
- D. 1,2, and 3,
Answer: A
Explanation:
According to IIA guidance, the internal audit activity can consult on CSR program design and implementation, serve as an advisor on CSR governance and risk management, and identify and mitigate risks to help meet the CSR program objectives. These roles enable the internal audit to add value through both advisory and assurance services regarding CSR, aligning with their expertise in governance, risk management, and control.
IIA guidance on the role of internal auditing in corporate social responsibility; Standards on advisory services.
NEW QUESTION # 142
When performing benchmarking during the planning phase of a performance audit, an internal auditor should:
- A. Identify comparative organizations.
- B. Project future performance levels.
- C. Develop functional action plans.
- D. Determine the current performance gap.
Answer: A
NEW QUESTION # 143
Which of the following is an example of an entity-level control pertaining to the finance area of an organization'?
- A. Segregation of duties between posting and reviewing journal entnes
- B. The establishment of a finance and audit committee
- C. Key account reconciliation such as bank reconciliation
- D. A signing authority matrix for spending approvals
Answer: B
Explanation:
An example of an entity-level control pertaining to the finance area of an organization is "The establishment of a finance and audit committee." This is a governance control that provides oversight of financial reporting, internal controls, and audit functions, and is designed to ensure integrity and accuracy in financial statements and compliance with laws and regulations.
References: COSO Framework on Internal Control
NEW QUESTION # 144
Which of the following is a limitation of detective internal controls in fraud management?
- A. Implementation costs tend to be higher than the expected benefits.
- B. They are not designed to improve efficiency of operations.
- C. They are not effective in preventing fraud.
- D. They tend to be easy for fraudsters to circumvent.
Answer: C
Explanation:
Detective internal controls are a limitation in fraud management because they are not designed to prevent fraud but to identify fraud after it has occurred. Their primary purpose is to detect and provide feedback on incidents of fraud, thereby allowing corrective action to be taken. However, they do not stop the initial occurrence of fraudulent activities.References: IIA guidance on types of controls and their effectiveness in fraud prevention.
NEW QUESTION # 145
When internal auditors perform consulting services that add value and improve an organization's operations, these services:
- A. Impose no responsibility to communicate information other than to the engagement client.
- B. Should be consistent with the internal audit activity's empowerment reflected in the charter.
- C. Impair the internal auditors' objectivity with respect to an assurance service involving the same engagement client.
- D. Would preclude the achievement of assurance from the consulting engagement.
Answer: B
Explanation:
Section: Volume A
NEW QUESTION # 146
Which of the following represents an example of an ethical issue that the organization should address'?
- A. An employee saw that a group of other employees were smoking in close proximity to petrol distribution tanks
- B. An employee discovered that there is no personal protective equipment at a temporary construction site
- C. An employee received concert tickets from a vendor and asked whether she could keep them
- D. A supervisor insists that an employee complete time sheets regularly
Answer: C
NEW QUESTION # 147
Which of the following is an example of a preventive control activity for risk related to pollution caused by waste disposal?
- A. Taking periodic samples of the area at risk and logging the results.
- B. Seeking legal consultation from a firm with experience in environmental law.
- C. Maintaining strict security around environmental department files.
- D. Offering an education program delivered by environmental experts.
Answer: D
NEW QUESTION # 148
Which of the following is most likely to be an element of an effective compliance program?
- A. The organization uses monitoring systems designed to detect improper activity.
- B. The program is communicated to employees in a video format on a one-time basis.
- C. The internal audit activity is assigned responsibility for overseeing the program.
- D. The organization obtains as much information as possible when performing background checks on employees.
Answer: A
NEW QUESTION # 149
The chief audit executive (CAE) is drafting the annual internal audit plan and seeks input from senior management and the external auditor prior to submitting it for approval to the board.
According to IIA guidance, which of the following statements is true regarding this scenario?
- A. The CAE acted appropriately, as he has authority to determine who reviews and approves the audit plan.
- B. The CAE should have developed the audit plan without outside influence to maintain objectivity.
- C. The CAE acted appropriately, and the independence of the internal audit activity was not impaired.
- D. The CAE's actions are likely to impair the independence of the internal audit activity.
Answer: C
NEW QUESTION # 150
While preparing the audit plan for an automobile manufacturing company, the chief audit executive (CAE) noted that the company's engineering department received a high risk ranking. However, the internal audit activity is understaffed, and current staff do not possess the necessary skills to adequately assess the effectiveness of the engineering department. What is the most appropriate course of action for the CAE to take?
- A. Recruit internal auditors with the required competencies and wait until they are employed before including this audit on the internal audit plan.
- B. Proceed with a review of the engineering department but supplement the internal audit team with nonauditors from an external engineering company who have the required skills to assist
- C. Advise management to accept the assessed risk until the internal auditors are able to review the area adequately.
- D. Include the engineering department on the audit plan, use the available internal audit resources to conduct the review, and exclude procedures that cannot be adequately assessed.
Answer: B
Explanation:
The most appropriate course of action for the CAE when facing a lack of internal audit staff with necessary skills to audit a high-risk area, like the engineering department, is to supplement the internal audit team with external experts who possess the required competencies. This approach ensures that the audit can be conducted effectively and comprehensively, allowing for an accurate assessment of risks and controls in the engineering department without delaying the review until new auditors can be hired and trained.
Institute of Internal Auditors (IIA) - International Professional Practices Framework (IPPF)
NEW QUESTION # 151
An internal auditor has completed an assurance engagement. Which of the following is most likely true regarding the engagement?
- A. The results of tie engagement were included m a written report mat was issued to the cleint who requested me engagement
- B. During audit planning the auditor determined that the engagement scope would include a review of the security and privacy of payroll records
- C. The client requested the review of a new payroll system in order to improve the security of fie system
- D. During audit planning the auditor provided the client with the scope of the engagement for their agreement
Answer: B
Explanation:
In the context of an assurance engagement, the auditor determines the scope of the engagement during the planning phase, which includes identifying the specific areas to be reviewed. In this case, if the engagement included a review of the security and privacy of payroll records, it means that during the planning phase, the auditor identified this area as part of the engagement scope. This step is crucial to ensure that the engagement objectives are met and that all relevant risks and controls are evaluated.
References:
* The IIA Standards: Standard 2200 - Engagement Planning: "Internal auditors must develop and document a plan for each engagement, including the engagement's objectives, scope, timing, and resource allocations."
* The IIA Practice Guide: "Engagement Planning: Establishing Objectives and Scope": Emphasizes the importance of defining the scope during the planning phase.
NEW QUESTION # 152
Which of the following is most accurate concerning corporate social responsibility?
- A. A moral agent in an organization makes decisions that are based on the rules and regulations of the organization as they apply to human resources decisions
- B. The individualism approach to ethical decision making is focused on implementing a customized long-term outcome that is most beneficial for the entire organization
- C. The utilitarian approaching deciding on ethical dilemmas is concerned with choosing the simplest solution that will apply to the most people
- D. Ethics are not defined by laws but they are not a matter of free choice ethics are based on standards of conduct derived from shared principles and values
Answer: D
Explanation:
Ethics are indeed not defined by laws alone; they are based on standards of conduct derived from shared principles and values. This statement most accurately reflects the nature of ethics in the context of corporate social responsibility (CSR), emphasizing that while ethics are guided by laws, they fundamentally originate from broader societal values and the ethical norms of the community.References: Basic ethical principles in CSR and business ethics literature
NEW QUESTION # 153
Management of an area under review is aggressive, upset, and questioning the knowledge and experience of the organization's internal auditors, as the audit results highlight critical findings. The relationship between the internal audit activity and management has continued to degenerate. as previous audit reports also showed a large number of issues. What would be the best strategy for working through the current audit results while also attempting to repair the relationship with management?
- A. Take an assisting approach and offer to assist with the implementation of action plans.
- B. Take an accommodating approach and change the overall rating of the audit report.
- C. Take an assertive approach and be persistent in attempting to convince the director.
- D. Take a compromising approach by modifying the tone of the report, while maintaining the critical findings.
Answer: C
NEW QUESTION # 154
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