An engagement supervisor noted that an internal auditor's personal relationship with a process owner resulted in the auditor providing a favorable and partial assessment during an audit within that process owner's are a. According to MA guidance, which of the following should be used to manage this impairment?

An employee disciplinary policy.

A functional reporting placement.

Which data analytics competency is critical for new internal auditors to possess in order to plan and perform internal audit engagements in conformance with the Standards?

Evaluate the use of data analytics in an internal audit.

Describe data analytics and the application of data analytics methods in internal auditing.

Apply data analytics methods in internal auditing.

Evaluate the use of data analytics in an internal audit.

Understand the definition of data analytics only.

Which of the following statements is true regarding the role of the internal audit activity in the organization's risk management process?

The internal audit activity may coach management on risk response scenarios if safeguards have been implemented.

The internal audit activity should not be responsible for developing the organization's risk management framework, even with appropriate safeguards.

The internal audit activity is typically responsible for alerting operational management to emerging risks and changes in regulatory scenarios

The internal audit activity may coach management on risk response scenarios if safeguards have been implemented.

The internal audit activity should avoid giving assurance regarding the accuracy of risk evaluations if safeguards have not been implemented.

When beginning an engagement to assess the effectiveness of the organization's newly revamped risk management processes, which of the following should internal auditors review first?

Organizational strategy and business plans.

Key risk disclosures in the annual report.

Existing risk assessment and identification processes.

Organizational strategy and business plans.

Risk mitigation plans and risk responses.

To encourage internal audit objectivity, which of the following is an appropriate policy the chief audit executive should establish?

Prior to hiring a new internal auditor, the chief audit executive must determine whether the auditor owns stock in the organization.

Internal auditors should report their audit findings directly to the audit committee.

To receive an outstanding performance rating, internal auditors are required to generate audit findings.

Prior to hiring a new internal auditor, the chief audit executive must determine whether the auditor owns stock in the organization.

Internal auditors are permitted to audit an entity managed by a close friend or relative, as long as they notify the chief audit executive.

As part of a fraud investigation by regulators, a court order was issued to a bank. The court order requested the chief audit executive (CAE) to provide access to a number of audit reports and workpapers, some of which included customers' confidential information such as transaction activity and other personal details. What is the appropriate response by the CAE?

Respond promptly and provide all that was requested by the court order.

Reject the court order, citing a potential breach of customers' confidentiality agreement

Consult with legal counsel to determine what information to provide.

Respond promptly and provide all that was requested by the court order.

Seek permission from customers prior to sharing their information.

Which of the following is an advantage of using nongovernmental organization (NGO) members on an assurance team when auditing corporate social responsibility?

NGO members are often more unbiased and objective

Typically less time is needed to train the NGO members on the audit process.

NGO members are often more unbiased and objective

A report with a positive statement from an NGO member is deemed to be more credible. As opposed to auditors.

NGO members are licensed to audit corporate social responsibility.

The collaborating style for conflict resolution, where the parties promote assertiveness and work together to develop a mutually beneficial solution, is best used in which of the following situations?

There is a high level of trust among the parties.

Parties are confident of the solution and are ready to defend it.

There is a high level of trust among the parties.

Resolution is time sensitive and a quick decision is necessary.

The issue is more important to one patty than the others.

According to IIA guidance, which of the following corporate social responsibility {CSR) evaluation activities may be performed by the internal audit activity?

Consult on CSR program design and implementation

Serve as an advisor on CSR governance and risk management.

Review third parties for contractual compliance with CSR terms.

Identify and mitigate risks to help meet the CSR program objectives.

A newly hired internal auditor is most likely to need further education in the area of business acumen in which of the following situations?

She was recruited from the internal audit activity of another organization that operates in a different industry.

She was transferred from the managerial accounting department of the same organization.

She was recruited from the internal audit activity of another organization that operates in a different industry.

She was offered a permanent position after she had worked with the organization for two years in a temporary auditor-in-training position.

She previously served on the organization's external audit team and was recruited to the internal audit activity following the current year's financial audit.

Which of the following is true about a system of internal control?

Strategy should fit the system of internal control.

Internal control should be updated at least annually.

Technology does not change the internal control landscape.

Strategy should fit the system of internal control.

Articulating measurable objectives is part of internal control.

According to MA guidance, which of the following statements is true regarding internal auditors' use of technology-based techniques?

Auditors must consider using technology only when the Implementation cost does not exceed benefits.

Auditors must consider using technology if it advances the engagement, even when implementation costs exceed the benefits.

Auditors must considering using technology to reduce the organization's risk by detecting all instances of fraud.

Auditors must consider using technology only when the Implementation cost does not exceed benefits.

Auditors must consider using technology in a variety of engagements to ensure that their work is substantiated and infallible.

Which of the following scenarios best illustrates the concept of due professional care?

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.

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.

As head of the internal audit activity, the chief audit executive reported functionally to the organization's board and administratively to senior management.

As head of the internal audit activity, the chief audit executive ensures that engagement supervisors conduct post-engagement staff meetings.

An organization is considering purchasing a new banking software system and has asked the internal audit activity to evaluate the system. An internal auditor assigned to perform the engagement worked at the software company two years ago and is familiar with the system's design strengths and weaknesses. Which of the following is true regarding impairment to the auditor's objectivity?

The auditor must disclose to the chief audit executive that this situation may impair her objectivity.

This situation does not necessitate any action related to the auditor's objectivity.

The auditor should decline to perform the audit because personal conflicts of interest are likely.

The auditor must disclose to the chief audit executive that this situation may impair her objectivity.

The auditor can provide only consulting services, not assurance.

Which of the following statements best describes internal auditors' role in fraud detection?

Internal auditors' demonstration of adequate professional skepticism during an audit engagement is of paramount importance.

Internal auditors' roles are similar to those performed by loss prevention managers or fraud investigators.

Internal auditors' demonstration of adequate professional skepticism during an audit engagement is of paramount importance.

Internal auditors should consider fraud risks in every assignment and demonstrate due care by detecting fraud instances.

Internal auditors should possess a fraud-related body of knowledge, enabling them to carry out preventative and detective measures.

The chief audit executive (CAE) planned an in-person group training to help internal auditors perform onsite inspections of an automobile manufacturing facility. The training would have allowed the auditors to better understand the production of the organization's automobiles. However, a global health crisis has impacted the training by prohibiting in-person contact at the facility. Which of the following could the CAE use to provide auditors with a better understanding of the organization s production process?

A virtual meeting with management that explains the production of automobiles

A general web-based training on auditing manufacturing processes.

Self-study courses on the industry's production practices

Industry publications that discuss production methods

A virtual meeting with management that explains the production of automobiles

According to the Standards, which of the following demonstrates the proficiency of an internal auditor?

Each internal auditor must have sufficient knowledge of IT risks and controls, and be able to evaluate the risk of fraud and the manner in which it is managed by the organization.

Each internal auditor must hold one or more certifications in the area of fraud and seek out continuing professional development related to fraud detection and fraud investigation.

Each internal auditor must have sufficient knowledge of IT risks and controls, and be able to evaluate the risk of fraud and the manner in which it is managed by the organization.

Each internal auditor on the engagement team must possess the same level of knowledge, skills, and other competencies as other auditors on the engagement team.

Each internal auditor must be paired, by the chief audit executive, with an individual who possesses the knowledge, skills, or other competencies required to complete the audit.

According to MA guidance, which of the following is the strongest indicator of deficiencies in the risk management process?

Separate evaluations of the risk management process were conducted, but the results were never integrated.

The periodic evaluation of risk ratings is primarily dependent on subjective assessments.

Separate evaluations of the risk management process were conducted, but the results were never integrated.

Management's primary objective is minimizing changes to the structure and operation of the risk management process.

Many aspects of the related enterprise risk management program are informal and undocumented.

Under which of the following circumstances should the final audit report include a disclosure of nonconformance with the Standards?

The annual internal audit plan includes some consulting engagements that are based on opportunities rather than risks to the organization.

An external quality assessment of the internal audit activity is performed only once every five years.

The internal auditor provided negative assurance, because he found no evidence of misconduct.

The annual internal audit plan includes some consulting engagements that are based on opportunities rather than risks to the organization.

A new internal auditor moved into the internal audit activity from the payroll department and was immediately assigned to the payroll audit.

The internal audit activity is asked to provide consulting services regarding the risks related to implementing a proposed new Inventory management system. Which of the following would be a key consideration of the internal audit activity in accepting this engagement?

Ask the inventory manager to determine whether the work planned would be sufficient to meet the consulting engagement objectives.

Ensure that the method used to communicate the results of the consulting engagement is consistent with the board's preferred method.

Determine whether the benefits to be derived from the requested assessment would exceed the cost of providing the consulting service.

Use email and telephone conversations to convey the results of the engagement, as these may prove to be the most efficient methods for communicating.

An internal audit of an organization's disbursement department revealed that multiple payments were made to legitimate vendors bearing fraudulent banking information belonging lo employees in the department. These vendors were initially set up with accurate banking information but were subsequently modified by disbursement officers with access to the vendor management system.Which of the following controls would have likely prevented the fraudulent modification of vendors' banking information?

Management's approval is required for update to vendors' banking information.

Management periodically reviews and verifies the information in the vendor master Tile.

Management's approval is required for update to vendors' banking information.

Management randomly audits a sample of payments to verify the accuracy of vendors' banking information.

Management's approval is required before payments can be processed.

An internal audit activity is taking steps to promote professional development among the staff, and is in the process of implementing a mentorship program. According to HA guidance, which of the following is important for a successful mentorship program?

Meetings with mentors should be formal and scheduled.

It is best if the mentor is the chief audit executive.

Mentor meeting documentation should be retained in personnel files.

It should target both new hires and highly experienced staff.

Meetings with mentors should be formal and scheduled.

During an audit of the purchasing department, an internal auditor identifies significant issues that could affect the organization's financial reporting. Management disagrees with the audit results.Which of the following responses best demonstrates the internal auditor has the necessary competencies related to professional Judgment and conflict management?

The auditor meets with management to discuss the results and obtain a better understanding of the specific concerns.

The auditor maintains his convictions and continues to proceed with the review process despite management's concerns related to the results.

The auditor bypasses management, discusses the results with the board, and seeks the board's input on how best to address the recommendations.

The auditor consults with other members of the audit team, and together they develop alternative recommendations that management may be more likely to accept.

The auditor meets with management to discuss the results and obtain a better understanding of the specific concerns.

Which of the following scenarios is a characterize of an organization with a highly effective ethical culture?

An organization implements and communicates to staff a formal and comprehensive code of conduct, which is clear and understandable.

An organization waives reference and background checks when hiring for certain sensitive positions in order to not violate potential employees' rights to privacy.

An organization punishes senior management more harshly for ethics violations than it would for lower-level staff to send a message throughout the organization.

An organization conducts surveys of employees, suppliers, and customers once every five years to determine the slate of the ethical climate in the organization.

An organization employs ongoing monitoring and is considering implementing periodic evaluations to assess the continuing effectiveness of its risk management process. Which of the following statements Is true with regard to such periodic evaluations?

Periodic evaluation frequency may depend on the results of ongoing monitoring.

Periodic evaluations are considered to be less objective than ongoing monitoring.

Periodic evaluations can be more effective than ongoing monitoring.

Periodic evaluation frequency may depend on the results of ongoing monitoring.

Periodic evaluations frequently identify problems more quickly than ongoing monitoring.

Which of the following statements is true with regard to the quality assurance and improvement program (GAIP)?

Minutes of meetings held with senior management and the board to discuss the scope and frequency of internal and external assessments support the OAIP reporting requirement.

As the head of the organization, the CEO selects and appoints the external quality assessment team to perform the OAIP reviews.

The chief audit executive determines the scope and frequency of both internal and external quality assessments based on the availability and capacity of resources in accordance with the annual internal audit plan.

Minutes of meetings held with senior management and the board to discuss the scope and frequency of internal and external assessments support the OAIP reporting requirement.

The internal audit activity needs to assess whether each engagement on the annual internal audit plan is conducted in conformance with the Standards.

Which of the following represents a deficiency in the control environment?

Hiring procedures do not include background checks for prospective job candidates.

The sales department has failed to achieve targets for the last nine months.

Employees report suspicious activity by calling the organization's ethics hotline.

Hiring procedures do not include background checks for prospective job candidates.

Management reports three potential ethics issues to the board of directors.

According to MA guidance, which of the following is the most accurate statement regarding the internal audit charter?

The charter must be approved by both senior management and the board.

The IIA's Code of Ethics must exist outside of the charter to maintain independence.

The charter must be approved by both senior management and the board.

The nature of consulting services does not need to be defined in the Internal audit charter.

The charter provides a framework for performing a broad range of value-added audit services.

The chief audit executive (CAE) has hired a new internal auditor who was immediately assigned to a procurement function audit. Because the new auditor's name is similar to that of the procurement manager, some staff members think the two are related, although they are not. Which of the following actions is most appropriate for the CAE to take?

Take no action, as there is no impairment to independence.

Remove the new internal auditor from the engagement team.

Discuss the matter with the appropriate personnel to alleviate concerns.

Closely supervise the new auditor and carefully review his work.

Which of the following statements is the most appropriate for a chief audit executive to include in the internal audit policy manual in order to promote objectivity?

Internal auditors should limit the scope of an engagement if they become aware of a potential impairment of their objectivity in order to reduce the potential impact of the impairment on the engagement results.

Internal auditors may conduct a financial effectiveness engagement in a business unit at any point after being transferred from that area.

Internal auditors may conclude that a business unit's current control environment is adequate and effective if the review of the prior year's workpapers and audit report supports that conclusion.

Internal auditors may conduct an engagement in a business unit at any point after providing a training workshop in that area.

Internal auditors should limit the scope of an engagement if they become aware of a potential impairment of their objectivity in order to reduce the potential impact of the impairment on the engagement results.

Which of the following best demonstrates the board of directors' governance over internal control?

The majority of board members are experienced and qualified members of the organization's executive management team.

The board bears direct responsibility for developing and implementing the internal control system.

The majority of board members are experienced and qualified members of the organization's executive management team.

The board may be assisted by an audit committee, chaired by the chief audit executive.

The board is responsible for succession planning for the CEO and other key members of the executive management team.

The results of an assessment of the adequacy of controls would be considered incomplete or misleading unless the internal auditor considers which of the following?

Effectiveness of the control environment

Use of computer-assisted auditing techniques.

Which of the following would be considered an indicator that an organization's ethics program is not yet well developed?

Communication of ethics compliance expectations is the responsibility of employees' direct managers.

Disciplinary actions for ethics compliance violations are reviewed by the internal audit activity for consistency.

Communication of ethics compliance expectations is the responsibility of employees' direct managers.

The organization's code of ethics and related compliance policy are reviewed annually for potential updates.

The board of directors reviews ethics oversight metrics for violations and compliance.

Which of the following is most likely to impair the internal audit activity's independence?

Assigning compliance responsibilities to the chief audit executive.

Undertaking audit work in an area where internal auditors lack the necessary skills.

Establishing an internal audit activity without documented policies and procedures.

Assigning compliance responsibilities to the chief audit executive.

Concluding that an internal control is effective without first obtaining evidence

According to IIA guidance, which of the following activities is appropriate for an internal auditor to perform with regard to the organization's corporate social responsibility (CSR) program?

Facilitate a management self-assessment of CSR controls and results.

Determine whether the organization has adequate controls to achieve its CSR objectives.

Facilitate a management self-assessment of CSR controls and results.

Consult on the project design and implementation for the CSR program.

Exclude CSR-related external risks that are beyond the control of the organization.

IIA IIA-CIA-Part1 Practice Test 10 - Free Online Exam Prep & Questions

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