Which of the following would be the most suitable internal control framework for an organization to adopt?

A framework that specifies common best practices for an organization to evaluate and benchmark.

A framework that specifies correct and incorrect business methodologies.

A framework with precise specifications for how controls and processes should be employed.

A framework that offers step-by-step guidance for remedial action for all organization types.

Which of the following scenarios best illustrates the Fraud Triangle component known as "perceived opportunity"?

Duties are not properly segregated.

Substantial bonuses are awarded if financial targets are met.

Duties are not properly segregated.

Employees may perceive favoritism and feel overlooked and resentful.

Bonuses may not be paid this year.

Which of the following options describes the reason that conformance with The IIA's Code of Ethics is mandatory for internal auditors?

Ethical compliance provides the basis for stakeholder trust and confidence in the validity of the profession of internal auditing and the internal audit activity's findings.

Ethical compliance provides the basis for stakeholder confidence in the competence of the internal audit activity and of professional internal auditors.

Ethical compliance is necessary for internal auditors and the internal audit activity to accept responsibility for providing absolute assurance about the organization's risk management.

Ethical compliance provides the basis for stakeholder trust and confidence in the validity of the profession of internal auditing and the internal audit activity's findings.

The internal audit activity's ethical compliance sets the tone for the ethical compliance by the organization's board, management, and employees.

Which of the following statements is correct regarding disclosure of conformance or nonconformance with the Standards?

An internal audit activity that has been in existence fewer than five years cannot Indicate that it is operating in conformance with the Standards because it has not yet undergone an external assessment.

Once an external assessment validates conformance with the Standards, the internal audit activity may continue to use the statement until the next external assessment.

If it has been more than five years since the last external assessment was conducted, the Internal audit activity must cease indicating that it operates in conformance with the Standards.

The chief audit executive must disclose every instance of noncompliance with the Code of Ethics or the Standards.

The manager of the payroll department requested a review of the payroll process, but only wants the engagement to include processes related to approval of time worked. What type of activity is this?

Compliance assurance engagement.

Financial assurance engagement.

Operational consulting engagement.

Compliance assurance engagement.

Risk management consulting engagement.

Which of the following statements is true regarding control activities?

Control activities are carried out by first-line and second-line functions to mitigate risks.

Control activities are implemented by internal auditors to mitigate risks to an acceptable level.

Control activities provide the foundation for the organization to establish its risk appetite.

Control activities are a precondition to setting risk tolerance levels.

Which of the following indicates that internal audit independence may be compromised?

Internal auditors assigned to the audit engagement did not have the knowledge, skills, and competencies needed to perform their responsibilities.

The internal auditor maintains a close personal relationship with operational management.

Material observations were intentionally left out of the audit report.

Internal auditors assigned to the audit engagement did not have the knowledge, skills, and competencies needed to perform their responsibilities.

An internal auditor failed to apply professional skepticism while performing audit tests in an area overseen by an experienced, reputable manager

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?

Recruit internal auditors with the required competencies and wait until they are employed before including this audit on the internal audit plan.

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.

Advise management to accept the assessed risk until the internal auditors are able to review the area adequately.

Recruit internal auditors with the required competencies and wait until they are employed before including this audit on the internal audit plan.

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

Which of the following process weaknesses is most likely to cause an internal auditor the most concern about fraud risk?

Employee personal information in the payroll system could be updated without approval.

Final employee payroll list is belatedly sent to the bank for payment processing.

Employee salary is calculated by the payroll system without further verification.

Employee personal records in the permanent file are not updated in a timely manner

Employee personal information in the payroll system could be updated without approval.

An internal auditor in a busy internal audit activity reviews her continuing professional development records toward the end of the year and is concerned to find she has undertaken limited training and formal professional development. Which of the following actions is the most appropriate for her to take?

Accept that she is responsible for her own continuing professional development, develop a professional plan, and discuss it with the CAE.

Remind the chief audit executive (CAE) that he is responsible for her continuing professional development and needs to address the issue

Contact her professional organization and explain that she does not need formal professional development, as she is being developed sufficiently through undertaking audit engagements.

Accept that she is unlikely to meet continuing professional development requirements but look to attend training courses at the next available time.

Accept that she is responsible for her own continuing professional development, develop a professional plan, and discuss it with the CAE.

Which of the following engagements would be considered an appropriate consulting service?

The internal audit activity facilitates biannual training of the risk management team in risk identification methodologies.

The internal audit activity of a commercial bank routinely performs branch audits for compliance with regulations.

The internal audit activity participates in a cosourcing arrangement with an IT audit firm to test information systems security.

The internal audit activity facilitates biannual training of the risk management team in risk identification methodologies.

The internal audit activity partners with external auditors annually to complete fieldwork required as a part of the external audit exercise.

Which of the following statements is true regarding an organization's code of ethics?

It should require an annual attestation of compliance with the code of conduct by all employees.

It should be written with primary consideration given to using a rule-based approach.

It should be of two variations: one applicable internally and one applicable for third parties.

Its operational effectiveness cannot be tested using traditional audit and rating systems such as maturity models.

It should require an annual attestation of compliance with the code of conduct by all employees.

According to IIA guidance, the nature and scope of assurance and consulting services to be offered must be clearly delineated in which of the following internal audit documents?

The internal audit policies and procedures handbook.

The internal audit mission statement.

Each internal audit engagement letter.

Which of the following best demonstrates organizational independence of the internal audit activity?

Internal auditors must observe the law and make required disclosures

The chief audit executive reports directly to the board

Internal auditors may not disclose personal data of the audit client

Internal auditors may not accept gifts from management of the area under review

Internal auditors must observe the law and make required disclosures

Which of the following policies promotes internal audit objectivity?

The CAF's appointment is determined by the CEO

The chief audit executive (CAE) reports functionally to the CEO

The CAE s compensation is approved by the chief financial officer

The CAF's appointment is determined by the CEO

The CAE reports administratively to the chief operating officer

In which of the following situations has the internal auditor violated the IIA's Code of Ethics?

An internal auditor failed to acquire the continuing education credits needed for the year and requested that. The IIA change his certification status to inactive until the completed the required education activities.

An employee confided in an internal auditor and told him about fradulent activities. Although the employee asked for confidentially, the auditor disclosed her identity later during police questioning.

While auditing payroll controls, an auditor was granted temporary access to salary data. The auditor referred to the acquired information while negotiating her work conditions three months later.

Management considers an auditor to be highly competent and asked the audit to participate in an upcoming acquisition project. The auditor declined the request, calming a lack of knowledge.

An internal auditor failed to acquire the continuing education credits needed for the year and requested that. The IIA change his certification status to inactive until the completed the required education activities.

Which of the following is a primary benefit of implementing a governance risk management and compliance framework within an organization?

Automated risk management strategy tools

Which of the following actions best demonstrates an internal auditor exercising due professional care?

Using technology and data analysis techniques for efficiency

Testing an entire population, even when a sample would suffice

Using technology and data analysis techniques for efficiency

Enhancing knowledge, skills, and other competencies through professional development

Establishing audit objectives, performing audit tests, and implementing missing controls

Which of the following is true regarding risk analysis?

Impact and likelihood should be assessed together.

Impact and likelihood should be given equal consideration by the internal auditor.

Impact and likelihood should be measured using quantitative methods.

Impact and likelihood should be used to determine risk response.

An organization s board of directors has decided that the internal audit activity must have greater access to different pans of the organization in order to perform their assurance work effectively Which of !he following areas is the board seeking to improve by making this change?

Internal audit reporting structure.

Internal audit independence and objectivity.

Internal audit interaction with the board

According to HA guidance, which of the following statements is true regarding the internal audit activity's quality assurance and improvement program (QAIP)?

The chief audit executive is responsible for assessing the suitability and competence of an external assessor.

Internal assessments rely solely on the review of completed audit engagements for demonstrated performance

The chief audit executive is responsible for assessing the suitability and competence of an external assessor.

QAIP results must first be discussed with the board and approval obtained for distribution to senior management

At the board's discretion, the frequency of external assessments can exceed the five-year guideline

Which of the following is an example of the chief audit executive (CAE) demonstrating due professional care?

The CAE meets with the board of directors on a quarterly basis to provide a status update.

The CAE relies on CAEs in other organizations to understand how due professional care should be executed in her internal audit activity

The CAE meets with the board of directors on a quarterly basis to provide a status update.

The CAE assesses the audit staff's knowledge and skills annually to determine whether additional resources are needed to fulfill the internal audit plan.

The CAE provides absolute assurance to line management during each eternal audit engagement

An electrician visits a client to assess the scope of work. After the visit, the sales office compiles and sends the client a proposal based on the electrician's estimation and approved price list. The internal auditor notices that in the last six months, the number of cancelled proposals has increased substantially. Which of the following is a fraud risk scenario that the auditor should consider in this situation?

Some electricians may be offering clients opportunities for reduced fees if they pay with cash.

There is a new competitor in the area who offers better prices.

Sales representatives may be manipulating the proposals to include additional costs.

An unauthorized person may be modifying client data and cancelling the proposals.

Which type(s) of assessments in an internal audit activity's quality assurance and improvement program requires ongoing monitoring to evaluate internal audit activity's efficiency and effectiveness?

Neither internal nor external assessment

Both internal and external assessment

Which of the following demonstrates that the internal audit activity exercises due professional care?

Supervisors provide feedback to internal auditors after workpapers are reviewed

A self-assessment is conducted through the quality assurance and improvement program every five years

Internal auditors are required to give absolute assurance of regulatory compliance

The chief audit executive reports functionally to the board

What is expected of internal auditors in regards to due professional care?

Auditors perform assurance services needed to achieve the engagement's objectives

Auditors perform assurance services without regard to cost

Auditors perform assurance services effectively to identify all risks

Auditors perform assurance services needed to achieve the engagement's objectives

Auditors perform assurance services to guarantee all significant risks will be addressed

Which of the following would best serve to deter unethical behavior and encourage internal auditors to be objective in their work?

Periodic communications reminding internal auditors of Standards requirements

A requirement that internal auditors undergo objectivity training periodically

Periodic communications reminding internal auditors of Standards requirements

A review of the final audit report by the audit committee

Ongoing monitoring and periodic internal quality assessments

Wi ch of the following circumstances would most likely be considered a potential red flag for fraud by the internal audit activity?

The monthly payroll reports are not vetted to ensure terminated employees have been removed from the payroll system

The volume of nonroutine journal entries has steadily increased over time.

The database of approved suppliers has not been reviewed the last year

The recent employee survey indicates that some employees remain unaware of the organization's whistieblower hotline.

Which of the following statements is true regarding intangible assets?

Intangible assets are categorized as having either a limited life or an indefinite life.

The amortization period of an intangible asset cannot exceed 20 years.

The cost intangible assets with indefinite lives should be amortized.

Intangible assets are categorized as having either a limited life or an indefinite life.

Companies should record intangible assets at fair market value

An organization allows the same individuals to physical access inventory and purchase new assets when supplies are depleted. Which of the following would best help the organization manage the risk of fraud?

Management should established a policy requiring new inventory asset purchases to be made on serialized order forms with copies retained

Accounting personnel should regularly perform reconciliation between invoices and purchase orders

Accounting personnel should conduct a periodic inventory count and reconcile inventory movements

internal auditors should review Vie frequency and volume of purchased assets to detect trends in the inventory levels

Management should established a policy requiring new inventory asset purchases to be made on serialized order forms with copies retained

Which of the following scenarios demonstrates an impairment to internal audit independence?

The internal auditor s denied access to partner information from management of me area under review

The internal auditor tarts to disclose a potential conflict of interest relationship with management of the area under review

The internal auditor concludes that controls operate effectively, although he did not gather supporting evidence

The internal auditor was assigned to an assurance review of an area for which he previously had responsibilities

Which of the following scenarios demonstrates nonconformance with the Standards?

A chief audit executive fated to perform a risk assessment prior to preparing the audit plan

An internal auditor failed to expand the engagement and include managements preferences when determining the scope of an upcoming assurance engagement.

An internal audit activity lacks the skills need to perform a high-risk security engagement included on the annual audit plan.

A chief audit executive fated to perform a risk assessment prior to preparing the audit plan

An internal audit activity has existed for two years and has not undergone external quality assessment

Which of the following is an appropriate roe fa the internal audit activity?

Ensuring the organization's key risks are managed through appropriate controls.

Assisting the organization in maintaining effective controls.

implementing new controls to promote continuous improvement

Validating control assessments performed by the external auditor.

According to IIA guidance which of the following statements regarding ethics is true?

Business ethics of an organization must remain independent torn those of supplier's customers and business partners

Business ethics may vary within an organization with both domestic and foreign operations

Business ethics are universal n nature and organizations across the world are expected to comply with smear standards

A business ethics policy for an organization s established solely to direct me behavior and expectations of employees

Business ethics of an organization must remain independent torn those of supplier's customers and business partners

The internal audit activity is responsible for conducting fraud investigations. A potential fraud instance was identified during an audit engagement. The chief audit executive appoints a lead investigate. Which of the following would most likely be the next step?

Identify and interview witnesses first potential suspects later.

Ask internal auditors to gather all relevant information evidence

Identify and interview witnesses first potential suspects later.

Conduct a fraud risk assessment to the most vulnerable areas.

Determine me competencies needed and assess whatever team members have a conflict of interest.

IIA IIA-CIA-Part1 Practice Test 12 - Free Online Exam Prep & Questions

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IIA IIA-CIA-Part1 Practice Test 12

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