Which of the following activities is most likely to require a fraud specialist to supplement the knowledge and skills of the internal audit activity?

Employing audit tests to detect fraud.

Planning an engagement of the area in which fraud is suspected.

Employing audit tests to detect fraud.

Interrogating a suspected fraudster

Completing a process review to improve controls to prevent fraud

When taken by a chief audit executive, which of the following actions would be most likely to prevent division management from exaggerating sales reports?

Announcing a series of internal audit engagements focusing on compliance with corporate salesreporting policies.

Asking the president and the board to issue a statement of corporate policy stressing the importance of accurate management reporting and the negative consequences of intentional misreporting.

Setting up a hotline for employees to report fraudulent behavior anonymously, 4. Assisting the controller in developing and monitoring a series of business process indicators, which are historically correlated with, but independent of sales.

Which of the following scenarios would most significantly restrict the areas where interna! audit could perform assurance services?

The internal audit activity reports functionally to the chief financial officer

Regulators mandate specific audit engagements to be included in the audit plan.

The internal audit activity reports functionally to the chief financial officer

The internal audit activity reports administratively to the CEO and functionally to the audit committee.

The internal audit activity reports administratively to the chief financial officer.

According to NA guidance, which of the following describes the primary reason to implement environmental and social safeguards within an organization?

To enable Triple Bottom Line reporting capability.

To facilitate the conduct of risk assessment.

To achieve and maintain sustainable development.

To fulfill regulatory and compliance requirements.

The chief audit executive (CAE) of a new internal audit activity is creating an internal audit charter According to IIA guidance, which of the following terms is most likely to be included in the charter?

Internal auditors will demonstrate competence, concern, and the dedication expected of a professional,

Senior management will be present whenever the CAE interacts with the board, to ensure effective communication among all three parties.

Internal auditors will advise on the design of control policies and procedures in any area where the organization does not possess the requisite expertise,

Internal auditors will demonstrate competence, concern, and the dedication expected of a professional,

Internal auditors will receive performance-based compensation, including bonuses for reporting more than a stipulated number of observations.

According to NA guidance, which of the following practices by the chief audit executive (CAE) best enhances the organizational independence of the internal audit activity?

CAE reports to the board regarding audit staff performance evaluation and compensation.

CAE reviews and approves the annual audit plan,

CAE meets privately with the CEO at least annually.

CAE meets privately with the board at least annually,

CAE reports to the board regarding audit staff performance evaluation and compensation.

Which of the following statements is true regarding electronic funds transfer (EFT)?

EFT eliminates payment delays due mostly to the introduction of automated cash controls,

EFT is a popular mechanism for improving efficiency, but results in less internal control.

EFT significantly reduces the risk of fraud by eliminating the need for authorizations.

EFT eliminates payment delays due mostly to the introduction of automated cash controls,

EFT makes use of numerous automated controls, but is still vulnerable to fraudulent accounting entries.

According to the 11A Code of Ethics, which of the following is required with regard to communicating results?

The internal auditor should reveal material facts that could potentially distort the reporting of activities under review.

The internal auditor should present material information to appropriate personnel within the organization without revealing confidential matters that could be detrimental to the organization.

The internal auditor should disclose all material information obtained by the date of the final engagement communication.

The internal auditor should obtain all material information within the established time and budget parameters.

The internal auditor should reveal material facts that could potentially distort the reporting of activities under review.

Which of the following should a general internal auditor be able to characterize as an IT-related risk?

Audit logs are lacking in a system that processes personal data.

Computer servers are in a room that is accessible to all employees,

An IT architect avoids taking vacations and sharing his workload with coworkers,

Hours billed by IT developers exceed 24 hours daily.

Audit logs are lacking in a system that processes personal data.

Which of the following situations is most likely to heighten an internal auditor's professional skepticism regarding potential fraud?

A salesperson frequently complains about the organization's policy on sales commissions.

A procurement manager does not have the expected academic credentials for his position.

A salesperson frequently complains about the organization's policy on sales commissions.

The accounts payable supervisor has requested advances against her monthly salary on several occasions.

A financial accountant is absent from work frequently due to regular medical procedures.

Which of the following situations undermines the independence of the internal audit activity?

The internal audit activity is responsible for the company's risk management function, and its head manager reports to the chief audit executive.

A senior member of the internal audit activity once worked in the corporate finance department.

The organization's CEO reviews the internal audit activity's annual budget per the organization's policies and procedures.

The internal audit activity often uses management's risk profile to build its own risk profile for annual planning.

According to IIA guidance, which of the following statements regarding the internal audit charter is true?

The charter typically defines the internal audit activity's position within the organization.

The nature of consulting services typically is not included in the charter.

The chief audit executive must formally review the charter at least once a year

The nature of assurances provided to parties outside of the organization typically is not included in the charter.

The charter typically defines the internal audit activity's position within the organization.

Which requirement should the chief audit executive consider when communicating results of the quality assurance and improvement program to the board of a large organization?

The rating conclusions and the impact from results of the external assessment should be explained,

The internal assessment results should be discussed once every five years,

The rating conclusions and the impact from results of the external assessment should be explained,

The results of the external assessment should be discussed every seven years,

The qualifications and independence of the internal assessment team should be discussed

Which of the following best demonstrates internal auditors performing their work with proficiency?

Internal auditors work collaboratively with their engagement team.

Internal auditors meet with operational management at each phase of the audit process.

Internal auditors adhere to The IIA's Code of Ethics.

Internal auditors work collaboratively with their engagement team.

Internal auditors complete a program of continuing professional development.

Which of the following statements is most accurate with respect to the required elements of the quality assurance and improvement program?

Internal assessments provide sufficient objectivity to provide evidence to the board that the internal audit activity understands the organization's control processes.

Quality assessments focus on the internal audit activity's structure, relationships with stakeholders, compliance with the Standards, and internal audit staff proficiency.

In order to comply with the Standards, the internal audit activity must obtain an objective assessment of its processes and function at least once a year.

Internal auditors completing internal assessments must demonstrate certification to perform quality assessments.

Which of the following situations best describes an internal auditor who may have violated the IIA Code of Ethics principle of confidentiality?

The auditor was assigned to analyze the organization's incentive program and spent long hours reviewing other employees' bonuses,

The auditor intentionally omitted from his resume that he was fired from his previous job for fraud allegations,

The auditor decided not to notify her supervisor that her brother-in-law was responsible for the project the auditor was expected to evaluate.

The auditor asked the audit client to copy requested files to her personal unencrypted memory stick because it was faster and more convenient.

The auditor was assigned to analyze the organization's incentive program and spent long hours reviewing other employees' bonuses,

For a new board chair who has not previously served on the organization's board, which of the following steps should first be undertaken to ensure effective leadership to the board?

Chair should learn the current organizational culture of the company.

Chair should learn the current risk management system of the company.

Chair should determine the appropriateness of the current strategic risks.

Chair should gain an understanding of the needs of key stakeholders.

Which of the following must be in existence as a precondition to developing an effective system of internal controls?

A strategic objective-setting process.

An information and communication process.

Which of the following activities best demonstrates an internal auditor's commitment to developing professional competencies?

Completing a skills assessment and development plan for targeted training needs,

Requesting to be part of all engagements on the annual audit plan.

Attending a series of locally offered training courses.

Completing a skills assessment and development plan for targeted training needs,

Attending a webinar on how to use data analytics

Which of the following offers the best evidence that the internal audit activity has achieved organizational independence?

The internal audit charter is drafted properly and approved by the appropriate parties.

An independent third party has assessed the organization's system of internal controls to be adequate and effective,

The chief audit executive reports both functionally and administratively to the CEO.

The internal audit charter is drafted properly and approved by the appropriate parties.

The mission statement and strategy of the internal audit activity demonstrates alignment to organizational objectives.

The chief audit executive (CAE) has assigned an internal auditor to an upcoming engagement. Which of the following requirements would most likely indicate that the internal auditor was assigned to an assurance engagement?

The assigned internal auditor must determine the objectives, scope, and techniques of the engagement.

The CAE must personally obtain the needed skills, knowledge, or other competencies if the internal auditor does not have them.

The assigned internal auditor must not assume management responsibilities while performing the engagement

The assigned internal auditor must maintain objectivity while performing the engagement.

When would on-the-job training be more effective?

When it includes ongoing feedback and coaching from experienced team members.

When participants already have a certain degree of experience and knowledge.

When it makes up the largest part of the training budget.

When it includes ongoing feedback and coaching from experienced team members.

When it is standardized for the whole entire staff.

Which of the following strategies would be the most effective to share an organization's risk of losses through foreign currency transactions related to the accounts payable process?

Implementing controls to follow up on deviations.

Purchasing liability insurance.

Purchasing foreign currency reserves.

Which of the following is the most appropriate reason for a chief audit executive to conduct an external assessment more frequently than five years?

A change in senior management or internal audit leadership may change expectations and commitment to conformance.

Significant changes in the organization's accounting policies or procedures would warrant timely analysis and feedback.

More frequent external assessments can serve as an equivalent substitute for internal assessments.

The parent organization's internal audit activity agreed to perform biennial reciprocal external assessments to provide greater assurance at a reduced cost.

A change in senior management or internal audit leadership may change expectations and commitment to conformance.

The internal audit activity is responsible for which of the following actions related to an organization's internal controls?

Attesting to fairness of financial statements.

Mitigating risks affecting achievement of organizational objectives.

Enabling opportunities affecting achievement of organizational objectives.

Analyzing and advising regarding costs versus benefits of control activities,

Attesting to fairness of financial statements.

According to IIA guidance, which of the following most appropriately justifies the CEO's decision that the internal audit activity shall be responsible for risk management and investigation at a multinational organization?

The provisions of the internal audit charter

The recommendation of the parent office external auditors.

The provisions of the internal audit charter

The level of proficiency of the chief audit executive

Which of the following is an example of a risk reduction strategy?

Installing cameras around the plant

Outsourcing the payroll function.

Installing cameras around the plant

Which of the following would be included in quality assurance and improvement program (QAIP) reporting?

Conformance of individual engagements with the Standards,

Descriptions of standardized work practices.

Outcomes of internal audit key performance indicators.

Conformance of individual engagements with the Standards,

Annual summaries of consulting and audit engagements.

The board of directors of a global organization has found an increased number of reported cases of unethical practices since last year. To assist the board in gaining a better understanding of the degree of ethics awareness within the organization, which of the following actions should be undertaken?

Conduct an organizationwide employee survey on ethical practices

Request the internal audit activity to perform an ethics-related assurance engagement.

Offer in-house ethics-related training seminars for employees to attend.

Reaffirm the importance of the organization's code of ethics to all employees.

Conduct an organizationwide employee survey on ethical practices

After the final audit report was issued, the engagement supervisor received an expensive gift from management recognizing her assistance in improving the business, if the gift is accepted, which of the following would be true?

The engagement supervisor violated The IIA's Code of Ethics principle of objectivity.

The engagement supervisor violated The IIA's Code of Ethics principle of integrity.

The engagement supervisor violated The IIA's Code of Ethics principle of objectivity.

The engagement supervisor violated The IIA's Code of Ethics principle of confidentiality.

The engagement supervisor did not violate any principles of The IIA's Code of Ethics.

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

The CAE reports functionally to the CEO.

The chief audit executive (CAE) reports administratively to the chief financial officer.

The CAE oversees the effectiveness of the organization's risk management function.

The CAE reports functionally to the CEO.

The CAE managed the finance department for the past five years.

According to NA guidance, which of the following actions by the chief audit executive would best ensure that internal auditors demonstrate due professional care?

Ensuring the internal audit activity is not found fallible during audit engagements.

Developing policies and procedures for the internal audit activity.

Ensuring the internal audit activity is not found fallible during audit engagements.

Undertaking all engagements that management requests of the internal audit activity.

Ensuring the internal audit activity reports functionally to the board of directors.

An accounts payable clerk has recently transferred into the internal audit activity and has been assigned to an engagement related to accounts payable processes for which he was previously responsible. Which of the following is the best action for the new internal auditor to take?

If it is a consulting engagement, accept the assignment because direct knowledge of the existing accounts payable processes will provide depth and add more value.

If it is an assurance engagement, accept the assignment because direct knowledge of the existing accounts payable processes wifi provide depth and add more value.,

If it is a consulting engagement, decline the assignment and ask to be reassigned, because in a consulting engagement the auditor must not assess operations for areas in which they were previously responsible.

If it is a consulting engagement, accept the assignment because direct knowledge of the existing accounts payable processes will provide depth and add more value.

If it is an assurance engagement, accept the assignment because the chief audit executive had knowledge of the internal auditor's previous role when this engagement was assigned.

Which of the following statements is true regarding management's use of judgement to design, implement, and conduct internal control?

The use of judgment enhances management's ability to make better decisions about internal control, but cannot guarantee perfect outcomes.

Introducing judgment generally diminishes management's ability to make good decisions about internal control.

It is inappropriate for management to exercise judgement in areas such as specifying and using suitable accounting principles.

It is inappropriate for management to exercise judgement in assessing whether components are present, functioning, and operating together

According to ISO 31000, which of the following statements is correct?

The framework is designed to be effective for organizations no matter how small.

The board is responsible for setting the organizational attitude through tone at the top,

The internal audit activity will provide assurance over operating effectiveness but not over the design of risk management activities,

The internal audit activity can give objective assurance on any part of the risk management framework for which it is responsible.

The framework is designed to be effective for organizations no matter how small.

An internal auditor is providing consulting services on an area he was responsible for three years ago.Part of the consulting scope covers a review of a performance measuring system that the auditor helped to develop. What is the best course of action for the auditor to take concerning the consulting service?

Disclose the potential impairment to the customer before accepting the consulting engagement

Accept the consulting services only after receiving approval to do so from the board.

Accept the consulting services. The objectivity won't be impaired if it has been more than a year since he last worked in the area under review.

Refrain from providing the consulting service because he was responsible for that area and his objectivity will be impaired,

Disclose the potential impairment to the customer before accepting the consulting engagement

Which of the following preventative controls would be most effective for organizations facing business disruptions and respective financial losses?

Develop a business continuity plan for contingent situations,

Insure the organization against financial losses.

Rely on third-party cloud solution providers for the organization's systems.

Hedge company assets via purchasing derivatives.

IIA IIA-CIA-Part1 Practice Test 3 - Free Online Exam Prep & Questions

Which of the following most accurately describes the role of the board when it comes to organizational governance?

Responsibility for outcome of the process.

Responsibility to be involved in management of the organization.

Responsibility to determine who is accountable for outcomes.

Responsibility to identify risks in the organization's business environment

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