Real IIA IIA-CIA-Part1 Exam Questions Study Guide
Updated and Accurate IIA-CIA-Part1 Questions for passing the exam Quickly
IIA-CIA-Part1 Certification Exam is an essential step for internal auditors looking to enhance their knowledge and skills and demonstrate their commitment to the internal auditing profession's highest standards. By passing IIA-CIA-Part1 exam, internal auditors can distinguish themselves as experts in essential internal auditing principles and practices and advance their careers in the field.
NEW QUESTION # 61
Which of the following statements is true regarding the role of the internal audit activity in the organization's risk management process?
- A. The internal audit activity is typically responsible for alerting operational management to emerging risks and changes in regulatory scenarios.
- B. The internal audit activity should avoid giving assurance regarding the accuracy of risk evaluations if safeguards have not been implemented.
- C. The internal audit activity may coach management on risk response scenarios if safeguards have been implemented.
- D. The internal audit activity should not be responsible for developing the organization's risk management framework, even with appropriate safeguards.
Answer: A
NEW QUESTION # 62
Internal control processes in an organization require that all investments exceeding $20, 000 receive authorization from both the president and treasurer. After conducting a sample of these transactions, an auditor determined that 10 of the 500 investments in the sample had not included both required authorizations. The sample has a five percent acceptable error rate. Based on this sample, which of the following actions should the auditor take?
- A. Contact the organization's investment broker and confirm all investments.
- B. Confirm all of the investments with the organization's internal finance department.
- C. Determine that no further testing of investment authorizations is required.
- D. Complete a comprehensive review of the organization's investment activity and compare variations over prior years.
Answer: C
NEW QUESTION # 63
A chief audit executive used risk assessment to prepare the audit work schedule. Which of the following would be the least appropriate reason to modify the schedule?
- A. Budget constraints or expansions.
- B. Change in the relative risk of auditable activities during the year.
- C. Request for postponement since the audit would be too complicated.
- D. Need for coordination of audit activities with the external auditors.
Answer: C
Explanation:
Section: Volume B
NEW QUESTION # 64
According to IIA guidance, which of the following actions by the chief audit executive (CAE) best demonstrates the organizational independence of the internal audit activity?
- A. The CAE obtains senior management's approval to hire staff
- B. The CAE provides the board with an annual budget for approval
- C. The CAE reports significant issues to the organization's CEO
- D. The CAE seeks senior management approval of the internal audit charter
Answer: B
Explanation:
The chief audit executive (CAE) best demonstrates the organizational independence of the internal audit activity by providing the board with an annual budget for approval. This action emphasizes the independence from management by ensuring the internal audit budget and resource allocations are directly overseen by the board, thus maintaining an independent status within the organization.
IIA Standard 1110 - Organizational Independence
NEW QUESTION # 65
Regarding assurance and consulting services provided by the internal audit activity which of the following statements is correct?
- A. The nature and scope of an assurance engagement are subject to agreement with management of the area under review
- B. The nature and scope of a consulting engagement are determined by the internal audit activity based on its risk assessment
- C. The assurance engagement process ends with reporting
- D. Both assurance services and consulting services can be focused on controls or performance or both
Answer: C
NEW QUESTION # 66
An internal auditor is researching the laws and regulations related to a city's grant program. Which of the following procedures is least relevant to this task?
- A. Reviewing prior-year workpapers and asking officials if there have been any changes.
- B. Making inquiries of the audit committee about the nature of the grants.
- C. Reviewing applicable grant agreements.
- D. Discussing the matter with the city's chief financial officer, legal counsel, or grant administrators.
Answer: B
NEW QUESTION # 67
Which of the following is not part of the five-attribute approach to developing documentation for an audit observation?
- A. Condition.
- B. Effect.
- C. Recommendation.
- D. Management response.
Answer: D
NEW QUESTION # 68
An internal auditor is designing a sampling plan to test the accuracy of daily production reports over the past three years. All of the reports contain the same information except that Friday reports also contain weekly totals and are prepared by managers rather than by supervisors.
Production normally peaks near the end of a month. If the auditor wants to select two reports per month using an interval sampling plan, which of the following techniques reduces the likelihood of bias in the sample?
- A. Increasing the confidence level.
- B. Using multiple random starts.
- C. Increasing the precision.
- D. Estimating the error rate in the population.
Answer: B
NEW QUESTION # 69
Which of the following should the internal audit activity establish to ensure auditors develop the appropriate skills for conducting audits?
- A. A policy encouraging audit staff to earn certifications
- B. A quality assurance and improvement program to address audit risk areas
- C. An internal audit plan that links engagements to strategic objectives
- D. An audit charter that includes the internal audit activity mission and vision
Answer: A
Explanation:
To ensure that auditors develop the appropriate skills for conducting audits, the internal audit activity should encourage continuous professional development and may institute policies promoting certification attainment.
This approach directly supports the development of a proficient audit team equipped with the necessary skills and knowledge to conduct effective audits. Policies that encourage earning certifications such as Certified Internal Auditor (CIA), Certified Information Systems Auditor (CISA), etc., directly contribute to this objective by setting professional development as a priority within the audit function.References: The IIA's Guidelines on Continuing Professional Development and Standards for the Professional Practice of Internal Auditing
NEW QUESTION # 70
According to IIA guidance, which of the following would the internal audit activity examine in order to evaluate the organization's governance process for strategic and operational decisions'?
- A. The organization's mission and value statements, code of conduct, and whistleblowing policy
- B. The risk assessment process including interviews with senior management.
- C. Board meeting minutes the board policy manual, and past audit reports
- D. Staff compensation objective setting and the performance evaluation policy and process
Answer: C
Explanation:
The first step for a newly hired chief audit executive (CAE) to build and maintain the proficiency of the internal audit activity should be to incorporate the basic criteria of internal audit competency into job descriptions. This foundational step ensures that all current and future hires are aligned with the required skills and competencies needed for effective internal audit functions. It sets a clear expectation of skills and knowledge right from the recruitment stage, thereby facilitating the development and maintenance of a competent audit team.
The Institute of Internal Auditors (IIA) - Practice Guides on Talent Management
NEW QUESTION # 71
When reviewing operational risk for a department whose manager adopts a laissez-faire style of leadership, it is most important for the internal auditor to verify that:
- A. Employees are empowered to deal with unusual or emergency situations.
- B. Management has adopted an open-door policy to assist with communication.
- C. Employee decisions follow department and company guidelines.
- D. The manager considers employees' input when designing new procedures.
Answer: C
Explanation:
Section: Volume B
NEW QUESTION # 72
The chief audit executive of a large national retailer is reviewing the purpose and objectives of the organization's internal audit activity Which of the following objectives is best aligned with The IIA's Mission of Internal Audit?
- A. To ensure internal auditors possess the competencies needed to perform their responsibilities
- B. To assess the effectiveness of internal controls over organizational assets
- C. To operate within the budget established by the board of directors
- D. To implement a quality assurance and improvement program
Answer: B
NEW QUESTION # 73
It is important for a chief audit executive to seek formal approval from the board regarding an internal audit charter so that:
- A. The effectiveness of the internal audit activity can be measured.
- B. There is assurance that all internal audit activities will be completed.
- C. Improvements can be implemented in internal audit processes.
- D. The status of the internal audit activity can be more clearly established.
Answer: D
NEW QUESTION # 74
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. Encourage the CAE to communicate and coordinate with the external auditor.
- D. Assist the CAE with hiring objective and competent internal audit staff.
Answer: A
NEW QUESTION # 75
An internal audit team is performing an audit of workplace accident claims.
Which of the following actions by the audit team best demonstrates due professional care?
- A. Having an occupational health officer on the engagement team.
- B. Reviewing claims to ensure all accidents actually occurred in the workplace.
- C. Placing reliance on medical reports from the injured worker's doctor.
- D. Determining that the claims have been classified properly.
Answer: A
NEW QUESTION # 76
Which of the following statements is most likely to be true regarding a consulting engagement involving an organization's new payroll system?
- A. The payroll system engagement was scheduled as a result of internal audit's risk-based annual planning process.
- B. The internal auditor and engagement client established an understanding that the scope would include the new payroll system project.
- C. The internal auditor acknowledged the engagement client's satisfactory performance in the final engagement results that were communicated to senior management and the board.
- D. The internal auditor concluded that the engagement objectives would include assessing the effectiveness of the payroll process controls.
Answer: B
Explanation:
In a consulting engagement, especially when dealing with specific systems like a new payroll system, the scope of the engagement would typically be agreed upon between the internal auditor and the engagement client. This includes defining what aspects of the new payroll system will be evaluated. Such agreements are fundamental in consulting engagements to ensure that the auditor's activities align with the client's expectations and needs.
IIA Standards for Professional Practice of Internal Auditing
NEW QUESTION # 77
Which of the following best illustrates the application of due professional care during an audit of the procurement department?
- A. The internal auditor began checking purchase requisitions for proper authorizations. He stopped when he discovered an instance of noncompliance. and he concluded the controls were ineffective.
- B. The internal auditor selected a sample of purchase orders with amounts greater than S5.000, the threshold at which the organization requires a bidding process. The auditor obtained documentation of the bidding process for each purchase order in the sample.
- C. The internal auditor discovered an instance where management did not follow the standard bidding processes. The auditor assessed the validity of management'sreasons for deviating from standard practice and the supporting documentation, and determined that the deviation was acceptable.
- D. The internal auditor analyzed bidding documents provided by management. Management indicated that the documents were purchase orders issued to a sole-source vendor Based on the analysis and management's declaration, the internal auditor determined that the procurement process was effective.
Answer: B
Explanation:
Demonstrating due professional care involves thorough testing and evaluation of evidence. The internal auditor exhibited due professional care by selecting a sample of purchase orders above a specific threshold and obtaining documentation for each to verify compliance with the required bidding process. This methodical approach ensures that audit findings are based on sufficient, appropriate evidence and that conclusions about the effectiveness of controls are well-supported.
International Standards for the Professional Practice of Internal Auditing, particularly those related to due professional care and evidence evaluation.
NEW QUESTION # 78
Which of the following represents a deficiency in the control environment?
- A. The sales department has failed to achieve targets for the last nine months.
- B. Hiring procedures do not include background checks for prospective job candidates.
- C. Employees report suspicious activity by calling the organization's ethics hotline.
- D. Management reports three potential ethics issues to the board of directors.
Answer: B
NEW QUESTION # 79
During an audit of financial contracts, an internal auditor learns that a relative has a substantial loan with the organization. The auditor should:
- A. Notify management and the chief audit executive (CAE) and have the CAE determine whether the auditor should continue with the audit engagement.
- B. Immediately withdraw from the audit engagement.
- C. Proceed with the audit engagement but disclose in the engagement final communication that the relative is a customer.
- D. Exclude the relative's information from the audited work and proceed with the audit engagement.
Answer: A
NEW QUESTION # 80
According to IIA guidance, which of the following best describes acceptable methods for internal auditors to obtain qualified continuing professional education hours?
- A. Volunteering in relevant professional organizations, on-line training courses, and tutoring college students.
- B. Volunteering in relevant professional organizations, formal education, and tutoring college students.
- C. Formal education, on-line training courses, and tutoring college students.
- D. Volunteering in relevant professional organizations, formal education, and online training courses.
Answer: D
NEW QUESTION # 81
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