A third-party provider's questionable labor practices have exposed the organization to reputational risks and regulatory risks. Which of the organization's risk management practices was most likely ineffective?

The organization ensured that the third-party vendor provided the best pricing for the requested services.

The organization conducted quality control reviews of provided services to ensure industry standards were met.

The organization performed a due diligence review of all vendors during the bid review process.

The organization planned to issue a resolution concerning the third-party provider's labor practices.

According to IIA guidance, which of the following training methods is considered most effective in assisting new entry-level internal auditors in achieving competence with internal audit practices in the workplace?

Involvement in a variety of audit assignments.

Pursuance of an internal audit certification.

Enrollment in internal audit practice webinars.

Attendance of internal audit workshops.

Involvement in a variety of audit assignments.

Which of the following is part of a fraud detection program?

Evaluation of compensation programs.

Which of the following is the best reason why the engagement supervisor should take care in explaining to local management the criteria that will be used to measure the effectiveness of the control environment?

The assessment will cover soft controls and company values.

The assessment will focus on the policy for a particular process.

The assessment will lack a defined scope

The assessment will probably uncover fraud risks.

Which of the following is a limitation of detective internal controls in fraud management?

They are not designed to improve efficiency of operations.

Implementation costs tend to be higher than the expected benefits.

They tend to be easy for fraudsters to circumvent.

They are not designed to improve efficiency of operations.

They are not effective in preventing fraud.

Which type of engagement requires that the client agrees with the techniques used by the internal audit activity?

A sensitive fraud investigation.

According to the Standards, which of the following is a requirement for internal audit professional development plans?

Plans must include rotating auditors out into business units for temporary assignments so they can obtain more business knowledge.

Plans must include a path to certification so that each internal auditor has a certification in auditing finances.

Plans must ensure that staff development activities are based primarily on the skills and competencies needed to complete the audit plan.

Plans must include rotating audit areas so that auditors acquire business knowledge to be efficient in performing engagements.

Plans must include rotating auditors out into business units for temporary assignments so they can obtain more business knowledge.

To achieve conformance with the Standards, the chief audit executive must include which of the following activities in the quality assurance and improvement program (QAIP)?

Report the results of the QAIP to senior management

Require board oversight of the QAIP.

Assess Standards conformance for each individual engagement.

Conduct a self assessment at least once every five years.

Report the results of the QAIP to senior management

Anew internal auditor suspects fraud is taking place. Which action should the new auditor take?

Document supporting information and recommend an investigation to the appropriate audit management.

Collect relevant audit evidence and begin working with management of the area to investigate the fraud.

Inform the chief audit executive and meet with the suspect to determine whether the person committed fraud.

Document supporting information and recommend an investigation to the appropriate audit management.

Evaluate existing controls and implement new procedures to mitigate the opportunity for fraud.

A manufacturer of power tools is experiencing regular fluctuations in the price of electrical power which is having a serious impact on the bottom line. Which of the following would be the most effective risk strategy to reduce the impact of these fluctuations?

Use a forward contract for bulk power purchases

Use an average cost for power to smooth the bottom line.

Analyze the amount of power used to produce each power tool.

Review the current process to identify opportunities to reduce power usage.

Use a forward contract for bulk power purchases

A chief audit executive assigned an internal auditor to perform an assurance engagement. The auditor concluded with a major audit finding based on hearsay evidence Which of the following competencies did the auditor appear to be lacking?

Demonstration of due professional care.

Demonstration of ethical behavior

According to NA guidance which of the following should be documented in the internal audit chatter?

The nature of consulting services provided by the internal audit activity

The risk assessment process applied by the internal audit activity

The organization's internal control framework used by the internal audit activity

The nature of consulting services provided by the internal audit activity

The performance evaluation process used by the internal audit activity

An internal auditor performed a consulting engagement last year which included assisting with management's design of controls over the procurement function. How should the chief audit executive plan an assurance engagement on the adequacy of the internal control system in the procurement function in the current year?

Assign the engagement to another internal auditor on staff

Outsource the engagement to ensure independence

Harness the auditor's knowledge of the procurement function by assigning the engagement to the same internal auditor

Postpone the engagement to the following year to ensure enough time has passed since the controls were designed

Which of the following best describes a responsibility of the board of directors with regard to risk management throughout the organization?

Assume responsibility for the effectiveness and success of the risk management framework

Monitor the organization's overall risk activities in relation to its risk appetite and other risk criteria.

Guide the integration of risk management with other business planning and management activities.

Review the portfolio of risk of the organization in relation to its risk appetite.

Assume responsibility for the effectiveness and success of the risk management framework

An organization's fraud policies and procedures dictate that the internal audit activity does not have primary responsibility for conducting fraud investigations and should, in fact, refrain from involvement in investigations. Which of the following activities would be considered acceptable for internal auditors to perform of this organization?

Oversee and monitor senior management s approach to manage fraud risks

Evaluate the effectiveness of fraud investigations

Oversee and monitor senior management s approach to manage fraud risks

Set the tone for fraud risk management within an organization

Evaluate whether the financial statements are free of material misstatement due to fraud

A technology company recently hired an entry-level internal auditor. To achieve conformance with the Standards, which of the following must the newly hired internal auditor possess?

An understanding of fraud and fraud risk.

At least one audit-related certification

According to MA guidance, which of the following best describes how often the chief audit executive should review the quality assurance and improvement program of the internal audit activity?

At the completion of each engagement.

Whenever the business objectives of the organization change

Just prior to an external assessment of the internal audit activity

At the completion of each engagement.

Progressively on a day-to-day basis

What is the primary reason for establishing a continuing professional development program within an organization's internal audit activity?

To ensure all internal audit responsibilities can be met

To ensure all audit staff members are capable of performing a quality self-assessment.

To ensure that each auditor maintains responsibility for his own professional development.

To attract the best and most talented candidates in the profession

Which of the following statements is true regarding internal controls?

Strategic objectives are prerequisites to establishing internal controls.

Internal controls eliminate process breakdowns caused by human errors.

Well-established internal controls cannot be overridden.

Robust internal controls ensure business success.

Which of the following internal controls best mitigates the risk of corruption schemes between employees and vendors?

Having strong management oversight of the purchasing and accounts payable functions.

Establishing policies that prohibit an employee from receiving gifts from an interested party.

Having employees sign annual attestations that they adhere to the organization's code of ethics.

Having strong management oversight of the purchasing and accounts payable functions.

Conducting regular examinations of documentation both paper and electronic.

Which of the following organizations is adopting an acceptance technique in terms of its risk response?

An organization that takes no action in managing the possible exposure to an earthquake.

An organization that opts out of investing in a new region due to volatility in foreign exchange rates.

An organization that takes out insurance policies to protect its property and equipment.

An organization that deploys policies and procedures to guide business activities and practices

Which of the following is a way to demonstrate an individual internal auditor's competency through continuing professional development?

Analyze internal audit client survey feedback following audits

Create different training budgets for each of the internal auditors

Define average training hours per auditor as a team performance measure

Analyze internal audit client survey feedback following audits

Review training records for all internal auditors

An organization's operations management is aware of existing internal control deficiencies but they lack the competency to execute internal control measures. Which of the following actions if taken by the internal audit activity is appropriate to assist operating management in achieving continuous improvement on internal controls?

Provide training on controls and on self-monitoring processes

Foster the importance of the control environment

Provide training on controls and on self-monitoring processes

Recommend installing an enterprisewide risk management system.

Conduct more assurance assignments on high risk areas

Which of the following situations presents the lowest risk of impairing an internal audit activity's independence?

Senior management provides feedback on the scope of the internal audit plan.

Senior management has the authority to terminate the chief audit executive

Senior management has control over the internal audit activity's budget

Senior management provides feedback on the scope of the internal audit plan.

Senior management limits the internal audit activity's access to the board

During the closing meeting of a procurement audit, the business manager disagrees with the observation presented by the engagement supervisor and accuses the team of not understanding the procurement objectives The engagement supervisor blames the manager for impeding the audit What skillset should the chief audit executive utilize to manage this situation?

The ability to use analytical tools

In an internal audit charter, which of the following statements regarding the chief audit executive (CAE) would be most directly related to describing the responsibilities of the internal audit activity*?

The CAE shall report functionally to the board and administratively to the chief financial officer

The CAE and the Internal audit activity shall have full access to any and all records and personnel of the organization that are relevant to audit engagements

The CAE and the internal audit activity shall be independent and objective in performing their work.

The CAE shall report periodically on the performance of the internal audit activity relative to its plan

During an assurance engagement an internal auditor discovered that risk limits risk limit were set for a new market expansion project Management of the area under review was eager to comply and submitted a potential risk limit value for the auditor's review and approval. Which of the following would be an appropriate course of action for the auditor to take?

Review the submission and if no further remarks exist approve the risk limits

Provide advice if needed and ask management of the area under review to forward to senior management and the board for approval

Develop risk limit calculation criteria and ask management of the area under review to resubmit the values.

Avoid providing any advice or review until the audit report is issued

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

The CAE reports administratively to the chief operating officer.

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

The CAE's compensation is approved by the chief financial officer.

The CAE's appointment Is determined by the CEO

The CAE reports administratively to the chief operating officer.

Which of the following scenarios violates The IIA's standard regarding internal audit independence?

The CAE regularly meets with the organization's chief risk officer, who validates all reported audit findings and dictates which will be Included In the package to the audit committee.

The chief audit executive (CAE) reports on the internal audit activity's day-to-day tasks and responsibilities to the CEO.

An assessment of the risk management function is reviewed by an outside consulting firm because the CAE is temporarily fulfilling the role of risk manager.

The CAE regularly meets with the organization's chief risk officer, who validates all reported audit findings and dictates which will be Included In the package to the audit committee.

The internal audit activity will experience staffing shortages for the next six months due to planned and unplanned leaves of absence; therefore the CAE proposed including fewer audits in the annual audit plan compared to the previous financial year.

Which of the following activities best ensures that internal auditors grow professionally in alignment with current industry trends to meet the expectations of primary stakeholders?

Deploying self-assessments against a competency benchmark.

Acquiring memberships in professional organizations.

Developing professional succession plans.

Obtaining subscriptions to professional journals in their area of interest.

Management has implemented a segregation-of-duties policy for handling inventory. Which of the following fraud risks would be more concerning to an internal auditor following the implementation of this new policy?

The risk of collusion between parties.

The risk of falsified reconciliations.

The risk of low-liquidity inventory.

The risk of damages to the inventory.

During an audit engagement, a junior staff internal auditor begins to suspect a fraud may have occurred involving a friend of the engagement supervisor. He reports his concerns to the engagement supervisor, who disagrees with his suspicions and directs him to continue with the engagement as planned. Given the circumstance, what is the most appropriate action for the junior auditor to take?

Escalate the concern to the chief audit executive.

Document in the workpapers and expand testing.

Continue with the engagement as planned, per the more senior auditor.

Report the suspected fraud to law enforcement officials and seek financial restitution.

Escalate the concern to the chief audit executive.

IIA IIA-CIA-Part1 Practice Test 9 - Free Online Exam Prep & Questions

Which of the following is most important for an internal auditor to consider when developing an approach for an audit engagement in a foreign country?

Currency exchange rates, as they relate to internal audit-related expenses.

Differences in typical working hours, compared to other countries.

The effects of subtle language nuances on translations.

Accepted practices that may be illegal in other countries.

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IIA IIA-CIA-Part1 Practice Test 9

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