In a retail organization, sales teams compete with each other to achieve and exceed sales targets. Each quarter, the members of the top sales team receive a bonus. In this environment, management should closely monitor for the emergence of which of the following potential risks?

Risks related to data manipulation.

Risks related to employee turnover.

Risks related to data manipulation.

Risks related to employee competency.

Risks related to not achieving sales targets.

The internal audit activity conducted an organization wide risk assessment. One of the most significant risks identified is associated with the oil price market. The chief audit executive (CAE) is considering including in the annual audit plan an assessment of the effectiveness of oil price risk management. The manager responsible commented that the assessment was not needed, as market risks were regularly addressed by the financial risk committee. If the CAE decides to include this activity in the annual audit plan anyway, how should it be recorded?

A consulting engagement independent of the financial risk committee's review.

A joint consulting engagement with input from the financial risk committee.

Which of the following would be most helpful to measure whether an internal audit activity successfully provides risk-based assurance?

Percentage of highly significant risks covered by internal audit plan.

Percentage of previously unknown risks identified per engagement.

Percentage of internal audit staff skilled in alignment with the organization's structure and key risks.

Percentage of observations made in assurance engagements compared to advisory engagements.

Which of the following is an indicator of ineffective third-party risk management?

Due diligence of third parties is conducted only after contract signing.

Sourcing of third parties does not follow public procurement law.

Violations of service conditions trigger either fines or termination.

Due diligence of third parties is conducted only after contract signing.

The right-to-audit clause is limited by personal data protection regulations.

Senior management is eager to assess the organization's risks with regard to electricity sales processes, but the senior management team does not know where to start. How can the internal audit activity assist?

Perform an audit engagement to identify risk management practices deployed in electricity sales processes.

Outsource the identification of best practices for risk management to an external third party.

Perform an audit engagement to identify risk management practices deployed in electricity sales processes.

Recommend reporting the lack of risk management to government authorities and request guidance.

Facilitate a self-assessment workshop with the employees responsible for process execution.

There is a growing perception that employees generally evade their responsibilities. What impact will an internal auditor most likely see during an engagement?

Employees are likely to be supervised closely and given little freedom.

Supervisors are likely to reduce their level of supervision and increase span of control.

Employees are likely to be supervised closely and given little freedom.

Peer employees are likely to trust one another, but distrust management.

Employees are likely to join forces to accomplish their duties as teams.

Which of the following should be considered in developing a risk and control model for use in an engagement?

The risk and control model should be tailored to the organization that will be the subject of the engagement.

The risk and control model should be globally accepted by the profession.

The risk and control model should be strictly adhered to in performing the engagement.

The risk and control model should be tailored to the organization that will be the subject of the engagement.

The risk and control model should be developed individually by the auditor for use on individual audit projects within the planned engagement.

Which of the following is a detective control?

A compliance specialist carries out quarterly reviews of an organization's compliance with regulatory requirements.

An organization requires certain employees who occupy sensitive positions to sign attestation to the code of conduct on an annual basis.

A compliance specialist carries out quarterly reviews of an organization's compliance with regulatory requirements.

A front desk officer in an organization requires that visitors are identified by the host before access is granted.

An internal audit activity deploys audit management policies and procedures for team members.

Senior management asks the chief audit executive to review the organization's compliance with recently introduced legislation on international transfer pricing. The review requires an internal auditor who thoroughly understands the legislation and pricing methods. The internal audit activity does not have an auditor with those skills. Which of the following is the most appropriate course of action?

Outsource the engagement to an external audit firm that has appropriate skills.

Recruit a lawyer with knowledge of the legislation to the audit team and ask the new auditor to perform the engagement.

Decline to perform the engagement, as the internal audit activity does not have the appropriate skill set.

Carry out the engagement using existing internal audit staff to help them gain the appropriate experience.

With regard to the internal audit activity's quality assurance and improvement program, which of the following must be reported to the board?

Frequency of the quality assessments being performed.

A statement of independence of the organization's internal auditors.

Meeting minutes with the assessment team, if key risks were identified and discussed.

Frequency of the quality assessments being performed.

Summary of previous internal assessments undertaken.

Which of the following is (he most effective way any organization can ensure proper governance over its internal controls?

By introducing the universally accepted COSO internal control framework.

By adopting the best practices of similar organizations in the industry.

By adjusting their internal control framework as business practices evolve.

By introducing the universally accepted COSO internal control framework.

By encouraging the internal audit activity to provide training on internal controls.

An internal auditor creates a professional development plan to obtain more experience in the organization's environmental, social, and corporate governance initiatives. Which of the following would the auditor include in the plan to support these objectives?

A request to attend the organization's committee meeting that is focused on strategic community awareness.

A plan to study for and obtain a certification in nonprofit management.

A deadline within the individual development plan to meet the overall engagement objectives.

A plan to perform a variety of engagements to develop general skills that could be used to assess environmental, social, and governance initiatives.

A request to attend the organization's committee meeting that is focused on strategic community awareness.

With regard to governance, which of the following is a board-level responsibility rather than a management responsibility?

Obtaining assurance on external financial, regulatory, and internal audits.

Complying with laws, regulations, and codes.

Assigning authority and responsibilities organization wide.

Monitoring and measuring performance.

Which of the following is an area that an organization would most likely include as part of its corporate social responsibility reporting?

The number of complaints related to traffic from its new factory.

The profitability impact of its products in developing markets.

The amount of political donations to local government races.

The number of complaints related to traffic from its new factory.

The compensation packages awarded to senior management.

A new chief audit executive realized that the internal audit charter has not been updated in five years and only includes the Core Principles for the Professional Practice of Internal Auditing, the Code of Ethics, and the Standards. What mandatory component is missing?

Definition of Internal Auditing.

Operating Procedures of Internal Auditing.

Definition of Internal Auditing.

Attestation of Quality Assurance.

An organization established 20 years ago has had its internal audit activity in place for the last three years. Which of the following would allow the internal audit activity to accurately state that it is in conformance with the Standards'?

Documented internal assessments are performed periodically and confirm conformance.

Documented assessment was performed by the audit committee and confirmed conformance.

Internal and external assessments are performed annually, and nonconformance results are reported to the board.

The independent and objective judgement of the chief audit executive confirmed conformance with the Standards.

Documented internal assessments are performed periodically and confirm conformance.

An internal auditor is reviewing the results of an employee survey at a mining company. Which of the following would alert the auditor to a potential ethics issue?

Thirty percent of employees feel confident in raising concerns without a fear of retaliation.

Women account for 20% of the total number of employees in the company.

Thirty percent of employees feel confident in raising concerns without a fear of retaliation.

Most employees believe that transparent and fair decision-making forms the basis of business ethics.

Employees with longer work experience believe that they deserve more privileges than new hires.

During a monthly internal audit staff meeting, the chief audit executive (CAE) decided to reinforce the importance of internal audit staff being objective in their work. Which of the following examples would be most appropriate for the CAE to include as part of the meeting presentation?

Fieldwork completed by internal auditors should be appropriately reviewed.

Statistical sampling techniques should always be used to pull unbiased sampling for testing.

Fieldwork completed by internal auditors should be appropriately reviewed.

Internal auditors should avoid using the lunch room simultaneously with audit clients.

During the audit review period, there should be no nonaudit dialogues with the audit client.

Which of the following requests, if accepted by the internal audit activity, would impair its independence?

A request to determine appropriate risk management responses for management.

A request to develop workshops on corporate governance for management.

A request to act as liaison with external auditors.

A request to determine appropriate risk management responses for management.

A request to provide counseling services on ethical matters.

Which of the following situations is most likely to prompt the internal audit activity to disclose its nonconformance with the Standards?

The annual internal audit plan includes performance audits of main business processes, but reviews of high-risk development projects were not considered.

One of the organization's senior internal auditors owns a side business, though to date, no sales have been made to this business.

The annual internal audit plan includes performance audits of main business processes, but reviews of high-risk development projects were not considered.

The internal audit activity committed to carrying out an audit of documentation on investment hedging, and a hedging expert was contracted to assist with the engagement.

A periodic quality self-assessment of the internal audit activity identified a number of improvement areas with regard to key performance indicators.

Which of the following is an indicator that the internal audit activity does not fully conform with the Standards?

During an internal quality assessment, it was identified that rotational auditors often perform consulting engagements for areas of the organization where they had previous responsibilities.

The quality assurance and improvement program identified several opportunities for the internal audit activity to make improvements.

In lieu of an external assessment, the internal audit activity performed a self-assessment with independent external validation.

During an internal quality assessment, it was identified that rotational auditors often perform consulting engagements for areas of the organization where they had previous responsibilities.

External assessments are performed every five years by a competent internal audit team from the organization's parent company.

Which risk management activity would cause the internal auditor to assume a management responsibility?

Prioritizing risks for management.

Assessing management's acceptance of risk.

Reviewing a cybersecurity risk report issued by management.

Developing a list of emerging risks for management.

Prioritizing risks for management.

During an audit of an organization's accounts payable area, an internal auditor identified anomalies in the information examined that may indicate potential fraud. Which test should the auditor perform first to verify this?

Verify the completeness and integrity of the data being analyzed.

Identify duplicated organizational transactions.

Analyze all transactions within the targeted area.

Check control totals that have may have been falsified.

An internal audit of warehouse inventory revealed no material deficiencies. However, management later discovered fraud, which occurred during the period that was audited, and determined that a major control deficiency allowed the fraud to occur. Given management's discovery, which of the following statements is valid?

The internal auditors should have had sufficient knowledge of fraud to identify red flags indicating possible fraud.

The internal auditors violated the standard for due professional care because they did not detect the fraud, even though it occurred during the period that was reviewed.

The internal auditors should have had sufficient knowledge of fraud to identify red flags indicating possible fraud.

The internal auditors could not have detected the fraud due to collusion among employees in the inventory unit.

The internal auditors are not responsible for considering fraud risk, which is a management responsibility.

A chief audit executive (CAE) is concerned that the internal audit activity is not receiving adequate training and continuing education. Which of the following approaches should the CAE take?

Implement a uniform professional development plan for the internal audit activity.

Create a formal development agreement with each individual staff auditor.

Require each internal auditor to obtain the same professional certifications.

Require training and developmental activities that are sponsored by The HA.

Which of the following controls would most likely prevent fraud related to the overpayment of vendors?

Require the matching of a purchase order, receiving report, and invoice before payment.

Require supervisory review of all invoices and cash disbursements exceeding a stated threshold.

Require the matching of a purchase order, receiving report, and invoice before payment.

Require all checks to be signed by more than one person.

Require all invoices to be paid within 30 days by check only.

During an assurance engagement, an internal auditor identified that a developer of the organization's enterprise resource planning (ERP) system had intentionally modified the production code to commit a fraudulent transaction. Which control activity should be implemented to prevent such issues in the future?

Segregate duties between code development and migrating changes into production.

Conduct fraud training for the IT team responsible for the ERP system.

Penalize the developer who committed the fraud by terminating employment.

Restrict developers' access to the ERP system's test environment.

According to IIA guidance, a new internal auditor is expected to possess which of the following competencies?

Knowledge of IT risks and controls.

Technical industry-specific expertise.

Expertise in cybersecurity, an area of increasing risk.

Knowledge of IT risks and controls.

Knowledge of forensic accounting.

When performing an audit of the risk management process an auditor makes the observations listed below. Which poses the greatest risk to the organization?

The process in place to identify and evaluate new risks to the organization is informal and poorly documented.

The identified risks have not undergone a detailed review to ensure completeness in the past two years.

The controls in place to mitigate the risks are not tested on an annual basis to confirm operating effectiveness.

The process in place to identify and evaluate new risks to the organization is informal and poorly documented.

The identified risks have not been ranked to establish their importance and risk management priority.

Which of the following survey questions would be most effective to identify ethics violations within the organization?

Does your supervisor comply with laws and regulations affecting the organization?

Are the performance targets in your department realistic and attainable?

Do your coworkers have the knowledge, skills, and training needed to perform their job duties?

Does your supervisor comply with laws and regulations affecting the organization?

Do you have sufficient resources, tools, and time to accomplish your work objectives?

What is the best course of action when the internal audit activity does not have the knowledge necessary to perform a planned audit of the organization's new IT data backup process?

Provide data backup training to the engagement supervisor.

Postpone the audit engagement to a later date.

Recruit and hire a full-time staff auditor who is proficient in data backup processes.

Change the plan from an assurance engagement to a consulting engagement.

Provide data backup training to the engagement supervisor.

Which of the following statements is true regarding the importance of risk management?

Risk management includes consideration of potential opportunities for the organization.

Risk management ensures the ability to eliminate potential hazards to the organization.

Risk management includes consideration of potential opportunities for the organization.

Risk management aids with the establishment of appropriate key performance indicators.

Risk management increases employees' commitment and belief in strategic goals.

According to IIA guidance, the internal audit activity must be free from interference in which of the following areas in order to maintain organizational independence?

Compensating the chief audit executive.

Which of the following controls would be most useful to prevent an employee from using the organization's funds for inappropriate expenditures and falsifying financial records to conceal the fraud?

Requiring management approval for expenses.

Segregating duties in the payroll processes.

Confirming receipt of goods or services.

Performing background checks on newly hired employees.

Requiring management approval for expenses.

IIA IIA-CIA-Part1 Practice Test 17 - Free Online Exam Prep & Questions

Which of the following actions would be most effective to help an internal auditor determine how successful the organization has been in communicating the existence of its ethics hotline?

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IIA IIA-CIA-Part1 Practice Test 17

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