1. During the course of an engagement, an internal
Prohibits internal auditors from providing
auditor discovers that a clerk is embezzling funds
from the organization. Although this is the first
embezzlement ever encountered and the
organization has security department, the internal
auditor decides to interrogate the suspect. If the
internal auditor is violating the IIA Code of Ethics, the
rule violated is most likely?
A. Failing to comply with the law.
B. Failing to exercise due diligence.
C. Lack of loyalty to the organization.
D. Lack of competence in this area.
2. Internal auditors shall engage in those services for
which they do not have the necessary knowledge,
skills, and experience.
True False
3. Internal auditors must be objective in performing
their work. Assume that the chief audit executive
received an annual bonus as part of that individual’s
compensation package. The bonus may impair the
CAE’s objectivity if?
A. The bonus is based on monetary amounts
recovered or recommended future savings as a
result of engagements.
B. All of the answers are correct.
C. The bonus is administered by the board of
directors or its salary administration committee.
D. The scope of internal auditing work is evaluating
control rather than account balances.
4. A CIA is working in a non-internal auditing position as
the director of purchasing. The CIA signed a contract
to procure a large order from the supplier with the
best price, quality, and performance. Shortly after
signing the contract, the supplier presented the CIA
with a gift of significant monetary value. Which of
the following statements regarding the acceptance
of the gift is correct?
Acceptance of the gift violates the IIA’s code of
Ethics and is prohibited for a CIA.
5. An organization has recently placed a former
operating manager in the position of CAE. The new
CAE is not a member of the IIA and is not a CIA.
Henceforth, the internal audit activity will be run
strictly by the CAE’s standards, not the IIA’s. All four
staff internal auditors are members of the IIA, but
they are not CIAs. According to the IIA Code of Ethics,
what is the best course of action for the staff internal
auditors.
A. The IIA Code of Ethics is enforceable against
them even they are not CIAs.
B. The IIA code of ethics is not enforceable against
them even they are not CIAs.
C. They should comply with the standards for the
professional practice of IA.
D. They should not comply with the standards for
the professional practice of IA.
6. Internal auditors shall perform their work with
honesty, diligence, and responsibility.
True False
7. Internal auditors should be objective. Objectivity:
a. Is required only in assurance engagement.
b. Is managed at the individual auditor,
engagement, functional, and organizational
levels.
c.
consulting services relating to operation for
which they had previous responsibility.
d. Requires internal auditors not to subordinate
their judgment on audit matters to that of
others.
8. The integrity of internal auditors established trust
and thus provides the basis for reliance on their
judgment.
True False
9. Accepting a fee or gift may create an appearance that
the auditor’s objectivity has been impaired.
True False
10. Internal auditors shall disclose all material facts
known to them that, if not disclosed, may distort the
reporting of activities under review.
True False
11. Which of the following is incorrect regarding
confidentiality?
a. Confidentiality requires that internal auditors
acquiring information in the course of
performing professional services neither uses
nor appear to use that information for personal
advantage or for the advantage of a third party.
b. The duty of confidentiality ceases after the end
of the relationship between the internal
auditors and the client or employer.
c. Internal auditors have an obligation to respect
the confidentiality of information about a client’s
or employer’s affairs acquired in the course of
professional services.
d. Confidentiality should always be observed by
internal auditors unless specific authority has
been given to disclose information or there is a
legal or professional duty to disclose.
12. RAM, an internal auditor, working for a chemical
manufacturer, believed that toxic waste was being
dumped in violation of the law. Out of loyalty to the
organization, no information regarding the dumping
was collected. Did RAM violate the IIA Code of
Ethics?
Yes, he violated the Code of Ethic by knowingly
becoming a party to an illegal act.
13. Which of the following is the least required in
attaining professional competence?
a. Period of meaningful work experience.
b. Continuing awareness of development in the
accountancy profession.
c. High standard of general education.
d. Specific education, training, and examination in
professionally relevant subjects.
14. Internal auditors shall not use information for nay
personal gain or in any manner that would be
contrary to the law or detrimental to the legitimate
and ethical objectives of the organization.
True False
15. Which of the following concurrent occupations could
appear to subvert ethical behavior of an internal
auditor?
a. Internal auditor and adjunct faculty member of a
local business college that educates potential
employees.
b. Internal auditor and landlord of multiple housing
that publicly advertises for tenants in a local
 community newspaper listing monthly rental
fees.
c. Internal auditor and well—known charitable
organization’s local in-house chairperson.
d. Internal auditor and part-time business
insurance broker.
16. Internal auditors should maintain confidentiality
except in social environment.
True False
17. Internal auditors apply the knowledge, skills, and
experience needed in the performance of internal
audit services.
True False
18. Internal auditors exhibit the highest level of
professional objectivity in gathering, evaluating, and
communicating information about the activity or
process being examined.
True False
19. Internal auditors shall perform internal audit services
in accordance with the International Standards for
the Professional Practice of Internal Auditing.
True False
20. Internal auditors respect the value and ownership
oof information they receive and do not disclose
information without appropriate authority unless
there is a legal or professional obligation to do so.
True False
21. Internal auditors shall not use information for any
personal gain or in any manner that would be
contrary to the law or detrimental and ethical
objectives of the organization.
True False
22. Internal auditors shall disclose all material facts
known to them that, if not disclosed, may distort the
reporting of activities under review.
True False
23. Internal auditors shall not continually improve their
proficiency and the effectiveness and quality of their
services.
True False
24. If a professional accountant is billing an audit client
for more hours than those actually worked, he will
be violating which of the following principles?
Integrity
25. MAC, an internal auditor of RNB Company nearly
finished with an engagement, discovers that COY
(marketing director) has a gambling habit. The
gambling issue is not directly related to the existing
engagement, and MAC is under pressure to complete
it quickly. MAC notes the problem and passes the
information on to the chief audit executive but does
no further follow-up. Did MAC’s actions violate the
Code of Ethics and/or IIA standard?
No, he did not violate either the IIA’s Code of Ethics
or the Standards.