Which of the following activities would an internal auditor perform as a consulting engagement for an organization?

Briefing the organization's department managers on how to implement risk management processes into their daily operations.

Advising new internal auditors working for the organization on how to develop strategies on planning audits for the upcoming fiscal year

Assessing whether the organization's corporate social responsibility program is meeting its yearly goals to reduce carbon emissions.

Briefing the organization's department managers on how to implement risk management processes into their daily operations.

Communicating with senior management to better understand how new purchasing controls will minimize payment processing time.

Which of the following actions would an internal auditor perform primarily during a consulting engagement of a debt collections process?

Advising management on streamlining the recording of accounts receivable.

Reviewing journal entries for accuracy and completeness.

Comparing the policies and procedures to regulatory collections guidance.

Advising management on streamlining the recording of accounts receivable.

Performing a walk-through of the debt collections process to determine whether proper segregation of duties exists

Which of the following statements is true regarding corporate social responsibility (CSR)?

Many of the areas explored by CSR are normally included in an audit universe or annual audit plan,

Despite significant corporate resources spent on CSR reporting, investors generally do not rely on CSR information.

Unlike many other areas of reporting responsibilities impacting stakeholders, CSR is largely voluntary.

Typically, operating management does not have a major role to play based on the public nature of reporting

According to IIA guidance, which of the following threats to objectivity is described as familiarity'?

An internal auditor is a close friend or relative of the manager or an employee of the audit client

An internal auditor has a long-term business relationship with the audit client.

An internal auditor has an economic stake in the performance of the organization

An internal auditor is exposed to or perceived to be exposed to pressures from external parties

Which of the following is an example of risk monitoring to ensure a system is performing as intended?

Checking the progress of risk treatment plans

Considering the consequence and likelihood of risks

Documenting the risks and their areas of impact

Communicating to management about risks

Which of the following is a true statement regarding controls such as ethical values, tone at the top and operational style?

Breakdowns in the these types of controls have historically led to fraudulent financial reporting

Transaction testing, mapping and flowcharting is applicable while testing such controls

Breakdowns in the these types of controls have historically led to fraudulent financial reporting

Such controls can be defined as inherently ob)ective and tangible elements of control

From an audit perspective it is significantly easier to assess ethical values than segregation of duties

Which of the following represents an example of an ethical issue that the organization should address'?

An employee received concert tickets from a vendor and asked whether she could keep them

An employee discovered that there is no personal protective equipment at a temporary construction site

An employee saw that a group of other employees were smoking in close proximity to petrol distribution tanks

A supervisor insists that an employee complete time sheets regularly

An employee received concert tickets from a vendor and asked whether she could keep them

Which of the following is an example of impairment to internal auditor independence or objectivity'?

Internal auditors provide consulting services relating to operations for which they have current responsibilities

Assurance engagements for functions over which the chief audit executive (CAE) has responsibility are overseen by a party outside the internal audit activity

Internal auditors provide consulting services relating to operations for which they had previous responsibilities

Internal auditors provide consulting services relating to operations for which they have current responsibilities

Consulting engagements for functions over which the CAE has responsibility are overseen by a party outside the internal audit activity

In which of the following audits would the internal auditors most likely contribute to the assessment of organizational governance?

An assessment of performance management practices and establishment of key performance indicators

An assessment of compliance of individual data protection procedures with data protection regulations

An assessment of profit and loss generated by financial assets and instruments in the past quarter

An assessment of the effectiveness of back-up procedures and execution of business recovery plans

An assessment of performance management practices and establishment of key performance indicators

A chief audit executive (CAE) is considering hiring a candidate who most recently worked for a large public accounting firm What would be the CAE's most likely concern regarding this candidate*?

MPotential conflict of interest

An internal audit activity uses a rotational program to recruit high-performing staff members from other parts of the organization One of these individuals is nearing the end of her four-year internal audit rotation The chief audit executive assigned her to an assurance engagement in the business area she will be going into when she leaves the internal audit activity Which of the following statements is true regarding this scenario?

Accepting the assignment creates the appearance of an impairment to her professional judgment and detectivity

Accepting the assignment is a violation of internal audit independence

Accepting the assignment will improve competencies and develop relationships that will be needed in her next assignment

Accepting the assignment creates the appearance of an impairment to her professional judgment and detectivity

Accepting the assignment on the assurance engagement would be a breach of due professional care

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

Outsourcing the payroll function

Installing cameras in the mailroom

A global organization established a new internal audit activity and the recently hired chief audit executive needs to develop an internal audit manual for internal auditors Among the following policies in the manual, which would facilitate internal auditors in upholding their objectivity?

Internal auditors shall attend professional workshops to refresh internal audit norms and concepts

Internal auditors' performance is synchronized with satisfaction ratings given by audit clients

Internal auditors take prior audit results into account when conducting current audit engagements

Internal auditors observe the audit client's expectations when scoping audit engagements

According to IIA guidance, which of the following actions is a chief audit executive required to take with regard to reporting the results of the quality assurance and improvement program?

Report external assessments upon completion of such assessments

Report external assessments at least annually

Report ongoing monitoring quarterly

Report post-engagement reviews at least once every five years

Which of the following best describes the board's role in establishing effective organizational governance?

The board has oversight responsibility for organizational resources

The board is involved in approving operational policy

The board monitors key processes and procedures

The board has oversight responsibility for organizational resources

The board approves management's detailed plans and objectives

Which of the following statements is true regarding corporate social responsibility (CSR)?

Many of the areas explored by CSR are normally included in an audit universe or annual audit plan

Despite significant corporate resources spent on CSR reporting investors generally do not rely on CSR information

Unlike many other areas of reporting responsibilities impacting stakeholders, CSR is largely voluntary

Typically operating management does not have a major role to play based on the public nature of reporting

Which of the following is the best example of an ongoing independent monitoring activity'?

External audit quality assurance activities

Management quality assurance activities

Internal audit fraud prevention and detection activities

Management and supervisory activities

External audit quality assurance activities

Which of the following would be considered an impairment to an internal auditor's objectivity when performing a review of the organization's procurement function'?

The internal auditor is part of a multidisciplinary team tasked to assist with a new project implementation checklist within the organization

The internal auditor worked on the implementation of the accounting system within the organization before joining the internal audit activity last year

The internal auditor is part of a multidisciplinary team tasked to assist with a new project implementation checklist within the organization

The internal auditor worked as a sourcing specialist before joining the internal audit activity last year

The internal auditor participates in a cross-departmental team for information and data security within the organization

Which of the following would be a red flag for potential issues in the control environment?

Compensation structures that are based on commissions

Segregation of duties during preparation of the financial statements

Compensation structures that are based on commissions

A low rate of turnover in key financial positions

The presence of a whistleblower policy and fraud hotline

Which of the following characteristics is typical of the internal audit activity?

Ensures the organization complies with laws and regulations in the area under review

Serves third parties that need reliable financial information from audit engagements

Responds to the needs and desires of senior management and the board, but remains independent of areas under review

Ensures the organization complies with laws and regulations in the area under review

Is completely independent of senior management, the board and the area under review

According to IIA guidance, which of the following is required of an internal audit activity?

The chief audit executive must decline a consulting engagement or obtain competent advice and assistance if internal auditors lack the necessary competencies or skills

The internal audit activity should refrain from conducting an assurance engagement for which it lacks the necessary competencies or skills

The chief audit executive must decline a consulting engagement or obtain competent advice and assistance if internal auditors lack the necessary competencies or skills

The audit committee should ensure that the internal audit activity continuously improves its knowledge and skills in order to fulfill its responsibilities

In today's business climate which is dominated by technology and big data, it is imperative that each staff internal auditor has detailed knowledge about IT risks and technology-based audit techniques

Which of the following should be implemented to promote independence of the internal audit activity?

The chief audit executive reports functionally to the board

Internal auditors do not review an area where they previously worked

The internal audit charter is reviewed and updated annually

The chief audit executive reports functionally to the board

Management does not influence the consulting services provided by the internal audit activity

A new company's risk management function is developing its cybersecurity risk management program Which of the following actions should be the first priority when developing the program?

Define the cybersecurity risk appetite and perform a cost-benefit analysis of the program

Start building a cybersecurity culture and set the desired behavior using a bottom-up approach

Determine the cybersecurity framework that will establish and report on the effectiveness of the program

Define the cybersecurity risk appetite and perform a cost-benefit analysis of the program

Raise cybersecurity awareness across various departments outside of the IT department

Which of the following actions is the internal audit activity best positioned within the organization to perform?

Monitor the organization's risk mitigations

Determine organizational risk tolerances

Monitor the organization's risk mitigations

Determine the likelihood and impact of risks

Advise the board on risk management issues

An internal auditor extended the scope of testing for a disbursements engagement following a fraud risk assessment Despite the investment of additional audit resources no significant issues were found Unfortunately a major payment fraud was discovered several months later According to IIA guidance which of the following statements is true regarding the internal auditor's application of due professional care?

Due professional care was applied as the internal auditor modified the scope based on reasonable judgment, despite the additional cost of resources

Due professional care was not applied because no additional work should have been performed unless there was actual evidence of fraud

Due professional care was not applied because the extended scope resulted in no issues being identified, while fraud actually existed

Due professional care was applied as the internal auditor modified the scope based on reasonable judgment, despite the additional cost of resources

Due professional care was applied as the cost of audit resources should not be a determining factor in the degree of testing undertaken

Which of the following statements is true regarding occupational fraud?

An employee who diverts the organization's purchases for personal use is demonstrating asset misappropriation

An employee who intentionally omits negative information in the financial statement disclosures is demonstrating an example of corruption

An employee who made an error in estimating losses may have committed fraud even if the error was not intentional

An employee who creates a denial of service in the organization's computer systems is committing asset misappropriation

Which of the following statements relating to risk management is true?

A lack of controls is acceptable if the risk is reduced to an acceptable level in some other way

The high-level risk assessment performed during engagement planning is a detailed step-by-step analytical process

External auditors must be engaged to evaluate the potential for fraud and how the organization manages fraud risk

A lack of controls is acceptable if the risk is reduced to an acceptable level in some other way

Internal auditors are responsible for managing the risks of the organization

When dealing with various stakeholders which of the following is true regarding an internal auditor's responsibility to remain objective and independent?

The internal auditor may initially disagree with management s acceptance of a risk, but reevaluate and agree with management's judgment after further discussion

When deciding between conflicting reports of a control's performance from a control operator and the operator's manager the internal auditor should generally believe the manager

Some audit issues may remain unremediated and unreported if management will accept recommendations that the internal auditor deems more important

The internal auditor may initially disagree with management s acceptance of a risk, but reevaluate and agree with management's judgment after further discussion

When working on business unit audits it is sometimes sufficient for the internal auditor to report deficiencies only to the unit manager when remediation is not complex

Which of the following strategies for professional development best demonstrates an internal auditor's competency'?

Membership in professional organizations

Subscriptions to sources of relevant professional information

Professional development and training plans

With regard to organizational governance assurance, which of the following is an appropriate role for the internal audit activity'?

Assess compliance with the organization's code of conduct

Oversee the governance and risk management processes

Initiate new organizational control processes

Provide advice on organizational governance activities

Which of the following is an example of an impairment to an internal auditor's independence?

Following the restructuring of the organization, the internal audit activity now reports functionally to the chief financial officer

An internal auditor delays reporting material financial statement audit findings until after his parents sell all of their stock in the company

Following the restructuring of the organization, the internal audit activity now reports functionally to the chief financial officer

A new member of the internal audit activity, who was the accounts payable supervisor for two years, is asked to consult on the implementation of a new accounts payable system

Believing there must be errors in a given balance sheet account the internal auditor decides to expand his testing

Which of the following statements is true regarding the independent peer review process undertaken to fulfill the requirement for an external quality assessment?

Individuals from a separate but related organization such as an affiliate may perform peer reviews

Two individuals in the same internal audit activity may perform an independent peer review as long as they do not report to the same audit manager

Individuals from a separate but related organization such as an affiliate may perform peer reviews

Individuals working in separate internal audit activities may be considered independent as long as do not report to the same chief audit executive

Peer reviews are generally less cost-effective than hiring an external quality assessor

IIA IIA-CIA-Part1 Practice Test 4 - Free Online Exam Prep & Questions

Question 1 / 40

The organization's internal audit charter was last updated six years ago. To update the charter, which of the following actions is most appropriate for the chief audit executive to take?

Wait for the next external assessment and address all of the missing information in the charter based on the recommendations from the external assessment team.

Perform a review of IIA guidance to become acquainted with the latest mandatory elements prior to updating the charter

Use an internal audit charter template from another organization that operates within the same industry.

Identify an individual within the internal audit activity who has in-depth knowledge of mandatory IIA guidance elements to address any gaps or areas of the current version of the charter that could be improved.

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IIA IIA-CIA-Part1 Practice Test 4

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