IIA-CIA-Part1 Exam Questions - Real & Updated Questions PDF
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NEW QUESTION 73
The work papers for an audit of hazardous-materials handling and disposal at an engineering research facility provide evidence that the following procedures were performed.
* Drums of hazardous waste not yet shipped off-site were inventoried. The physical count agreed with the company's inventory records.
* A sample of hazardous-waste shipments received at the disposal site was compared to bills of lading and company records. No errors were detected.
* The audit staff observed engineering personnel during the handling of hazardous materials. No company policy violations were noted.
The reconciliation of waste drums to the inventory records provides evidence that:
- A. All hazardous-waste drums in inventory were accounted for.
- B. Records of drums shipped to the waste disposal site were being maintained.
- C. The amount of hazardous materials being used was accurately recorded.
- D. Hazardous-waste materials were being disposed of as prescribed by company policy.
Answer: A
Explanation:
Section: Volume C
NEW QUESTION 74
Which of the following best describes the misdirection of payments on accounts receivable to an employee's bank account?
- A. Fraud off the books.
- B. Fraud on the balance sheet.
- C. Fraud hidden on the books.
- D. Fraud open on the books.
Answer: A
Explanation:
Section: Volume F
NEW QUESTION 75
Which of the following is not a standard technique that the chief audit executive (CAE) would use to provide evidence of supervisory review of working papers?
- A. The CAE prepares a memorandum discussing the results of the working paper review.
- B. The CAE completes an engagement working paper checklist.
- C. The CAE initials and dates every working paper after it has been reviewed.
- D. The CAE utilizes an external third party to make an objective recommendation after
each working paper review.
Answer: D
NEW QUESTION 76
According to IIA guidance, which of the following best describes processes and tools typically used in ongoing internal assessments?
- A. Benchmarking of the internal audit activity's practices and performance.
- B. Analysis of performance metrics such as cycle times.
- C. Self-assessments and surveys of stakeholder groups.
- D. Report of internal assessment results, response plans, and outcomes.
Answer: B
NEW QUESTION 77
A bakery chain has a statistical model that can be used to predict daily sales at individual stores based on a direct relationship to the cost of ingredients used and an inverse relationship to rainy days. What conditions would an auditor look for as an indicator of employee theft of food from a specific store?
- A. Both total sales and cost of ingredients used are greater than expected.
- B. On a sunny day, total sales are less than expected when compared to the cost of ingredients used.
- C. On a rainy day, total sales are greater than expected when compared to the cost of ingredients used.
- D. Both total sales and cost of ingredients used are less than expected.
Answer: B
NEW QUESTION 78
An organization that outsources much of its internal audit work to an external service provider is planning for an external quality assessment. Which of the following options would accomplish this task and be in conformance with the Standards?
- A. Engaging an external industry associate that performed a similar review for a supplier of the organization.
- B. Selecting a team from an independent entity that previously employed the chief audit executive of the organization.
- C. Using a team under the direction of the organization's chief audit executive, and obtaining validation from a former manager of the internal audit activity.
- D. Using the same external service provider because of its competency and experience with the organization.
Answer: A
NEW QUESTION 79
A chief audit executive (CAE) of a major retailer has engaged an independent firm of
information security specialists to perform specialized internal audit activities. The CAE can rely on the specialists' work only if it is:
- A. Carried out using standard review procedures for retailers.
- B. Carried out in accordance with the Standards.
- C. Performed under the supervision of the information technology department.
- D. Performed in accordance with the terms of the contract.
Answer: B
NEW QUESTION 80
According to the International Professional Practices Framework, a review team must express an opinion on which of the following when performing an external assessment of an internal audit activity?
I.Conformance with the Standards and IIA Code of Ethics.
II.
Effectiveness of continuous improvement activities.
III.
Feedback from internal audit customers and other stakeholder groups.
IV.
Efficiency and effectiveness of the internal audit activity's administration processes.
- A. I and II only.
- B. I only.
- C. III only.
- D. II and IV only.
Answer: B
NEW QUESTION 81
Which of the following actions would be considered a violation of the Standards?
I.Drafts of engagement communications were reviewed with the audit client to obtain input. The client's comments were considered when developing the engagement final communication.
II.
An auditor participated as part of a development team to review the control procedures to
be incorporated into a major computer application under development.
III.
Given limited resources, the chief audit executive performed a risk analysis to determine which functions to audit.
- A. I and III only.
- B. II only.
- C. I, II, and III.
- D. None of the above.
Answer: D
NEW QUESTION 82
An internal audit charter describes the mission and scope of the internal audit activity (IAA),responsibilities of the IAA,accountability of the chief audit executive,independence of the IAA,and standards followed by the IAA. Which of the following also should be included in the charter?
- A. The purpose of the IA
- B. A detailed audit plan or program for the year.
- C. The job specifications and descriptions of the internal audit staff.
- D. The IAA's right to have unrestricted access to functions,records,personnel,and physical property.
Answer: D
NEW QUESTION 83
A bank uses a risk analysis matrix to quantify the relative risk of auditable entities. The analysis involves rating auditable entities on risk factors using a scale of 1 to 10, with 10 representing the greatest risk. A partial list of risk factors and the ratings given to three of the bank's departments is provided below:
Department Risk Factor A B C Control structure 9 5 7
Nature of assets in department 2 7 9
Dollar value of assets 6 6 8
Complexity of transactions 3 4 8
Which of the following statements regarding risk in the departments is true?
Answer:
NEW QUESTION 84
The primary role of the internal audit activity in regard to an organization's ethical climate is to:
- A. Periodically assess the ethical climate.
- B. Demonstrate ethical behavior.
- C. Participate as chief ethics officer.
- D. Utilize surveys to evaluate employee ethics.
Answer: A
Explanation:
Section: Volume B
NEW QUESTION 85
Which of the following statements is correct regarding risk analysis?
- A. The highest risk assessment should always be assigned to the area with the largest potential loss.
- B. The extent to which management judgments are required in an area could serve as a risk factor in assisting the auditor in making a comparative risk analysis.
- C. The highest risk assessment should always be assigned to the area with the highest probability of occurrence.
- D. Risk analysis must be reduced to quantitative terms in order to provide meaningful comparisons across an organization.
Answer: B
NEW QUESTION 86
An auditor in charge was reviewing the workpapers submitted by a newly hired internal auditor. She noted that the new auditor's analytical work did not include any rating or quantification of the risk assessment results,and she returned the workpapers for correction. Which section of the workpapers will the new auditor need to modify?
- A. Condition section.
- B. Cause section.
- C. Criteria section.
- D. Effect section.
Answer: D
NEW QUESTION 87
Which of the following is not part of the five-attribute approach to developing documentation for an audit observation?
- A. Condition.
- B. Management response.
- C. Effect.
- D. Recommendation.
Answer: B
Explanation:
Section: Volume D
NEW QUESTION 88
Which of the following audit findings would have the least impact (either positive or negative) on a department's control environment?
- A. Many department functions are duplicated or verified by other department employees.
- B. The department makes long-term investment risk decisions to maximize return on investment.
- C. Deficiencies were found in the appropriate authorization of transactions.
- D. The department manager sets and demonstrates a tone of honesty and integrity in all business dealings.
Answer: B
NEW QUESTION 89
Which of the following is considered a common red flag indicator in helping to uncover fraud?
- A. Repeated poor performance.
- B. Experiencing financial difficulty.
- C. Termination from previous employer.
- D. Improper segregation of duties.
Answer: B
NEW QUESTION 90
According to IIA guidance, which of the following statements about working papers is false?
- A. They provide support for communication to third parties.
- B. They assist in the implementation of recommendations.
- C. They contribute to development of the internal audit staff.
- D. They demonstrate compliance with auditing standards.
Answer: B
Explanation:
Section: Volume F
Explanation/Reference:
NEW QUESTION 91
During an audit of financial contracts, an auditor learns that a relative has a substantial loan with the organization. The auditor should:
- A. Notify management and the chief audit executive (CAE) and have the CAE determine whether the auditor should continue with the audit engagement.
- B. Proceed with the audit engagement but disclose in the engagement final communication that the relative is a customer.
- C. Exclude the relative's information from the audited work and proceed with the audit engagement.
- D. Immediately withdraw from the audit engagement.
Answer: A
NEW QUESTION 92
In which of the following scenarios would a customer service hotline receive a high volume of complaints regarding payments not being applied to customers' accounts?
- A. Employees are submitting fraudulent expense reports.
- B. The customer service department is not forwarding complaints to the accounts receivable department.
- C. Invoices are not being mailed to customers.
- D. An employee is tampering with customer checks.
Answer: D
NEW QUESTION 93
An internal auditor is planning an audit of an organization where temporary employees are suspected of receiving pay for hours they have not worked. Which of the following tasks should not be performed at this stage in the audit?
- A. Interviewing shift supervisors about their employees' attendance.
- B. Obtaining a copy of the contract between the organizations and the temporary employment agency.
- C. Interviewing the manager who requested the audit engagement.
- D. Preparing an engagement program.
Answer: A
NEW QUESTION 94
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