IIA-CIA-Part1 Dumps Certified Internal Auditor - Part 1, The Internal Audit Activitys Role in Governance, Risk, and Control

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Certified Internal Auditor - Part 1, The Internal Audit Activitys Role

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NEW QUESTION 1
According to IIA guidance, which of the following best describes internal auditors' responsibility regarding fraud?
A. Internal auditors should take a leading role in investigating all fraud-related cases.
B. Internal auditors must have sufficient knowledge to evaluate the risk of fraud.
C. Internal auditors should report all fraud cases to law enforcement agents, in accordance with the Code of Ethics.
D. Internal auditors are responsible for ensuring that fraud does not occur.
Answer: B
NEW QUESTION 2
Which of the following statements accurately describes the responsibility of the internal audit activity regarding IT governance?
* 1. The internal audit activity does not have any responsibility because IT governance is the responsibility of the board and senior management of the
organization.
* 2. The internal audit activity must assess whether the IT governance of the organization supports the organization's strategies and objectives.
* 3. The internal audit activity may assess whether the IT governance of the organization supports the organization's strategies and objectives.
* 4. The internal audit activity may accept requests from management to perform advisory services regarding how the IT governance of the organization supports
the organization's strategies and objectives.
A. 1 only.
B. 4 only.
C. 2 and 4.
D. 3 and 4.
Answer: A
NEW QUESTION 3
Which of the following documents is most appropriate in promoting the objectivity of the internal audit
activity?
A. Usage of IT system policy.

B. Risk management framework.
C. Acceptance of gifts policy.
D. Personal responsibility policy.
Answer: C
NEW QUESTION 4
An organization invests its savings in a volatile stock with the potential for high gains rather than a mutual fund with a lower expected return and lower volatility.
This best describes which of the following risk concepts?
A. Risk identification.
B. Risk appetite.
C. Risk capacity.
D. Risk tolerance.
Answer: D
NEW QUESTION 5
According to the COSO enterprise risk management (ERM) framework, which of the following is not part of the new paradigm in ERM?
A. Assessing the risk factors.

B. Aligning risk appetite and strategy.
C. Enhancing risk response decisions.
D. Reducing operational surprises and losses.
Answer: A
NEW QUESTION 6
According to IIA guidance, which of the following roles would be appropriate for an internal auditor regarding fraud risk?
* 1. Identification.
* 2. Mitigation.
* 3. Remediation.
* 4. Reduction.
A. 1 onl
B. |
C. 1 and 4 only.
D. 1, 3, and 4 only.
E. 1,2, 3, and 4.
Answer: B
NEW QUESTION 7
Which of the following control activities is the most effective to ensure users' levels of access are appropriate for their current roles?

A. The human resources department generates a monthly list of terminated and transferred employees and requests IT to update the user access as required.
B. Standardized user access profiles are developed and the appropriate access profiles are automatically assigned to new or transferred employees.
C. System administrator rights are assigned to one user in each department who can update user access of terminated or transferred employees immediately.
D. Department managers are required to perform periodic user access reviews of relevant systems and applications.
Answer: D
NEW QUESTION 8
An organization is facing a financial downturn and needs to impose major budget reductions to all departments. According to MA guidance, which of the following
actions is most appropriate for the board to take to evaluate the potential impact on the internal audit activity?
A. Ask management to determine which internal audit engagements are lower risk and could be considered for removal from the annual audit plan.
B. Ask appropriate stakeholders for their opinion on the potential impacts of reducing the scope of the internal audit plan.
C. Ask the chief audit executive to determine whether budgetary limitations impede the ability of the internal audit activity to execute its responsibilities.
D. Ask The human resources department to determine how the annual compensation and salary of the audit staff could be adjusted to achieve savings.
Answer: C
NEW QUESTION 9
Evidence discovered during the course of an engagement suggests that multiple incidents of fraud have occurred. There do not appear to be sufficient controls in
place to prevent reoccurrence. Which of the following is the internal auditor's most appropriate next step?
A. Immediately notify management of the area under review and the other internal auditors involved in the engagement.
B. Discuss the situation with the engagement supervisor to determine whether fraud investigation experts are required to investigate the matter properly.
C. Fully document in the workpapers the evidence that has been discovered and recommend appropriate controls to address the fraud.
D. Provide the evidence that was discovered to local law enforcement for possible prosecution of the suspected fraud.
Answer: A
NEW QUESTION 10
According to the HA Code of Ethics, which of the following statements best describes the principle of competency?
A. Internal auditors shall perform their work with honesty, diligence, and responsibility.
B. Internal auditors shall perform their work in accordance with the Standards.
C. Internal auditors shall perform their work in accordance with the law and make disclosures expected by the law.
D. Internal auditors shall be prudent in the use of information acquired while performing their work.
Answer: B
NEW QUESTION 10
Who is responsible for setting the risk appetite?
A. External auditors.
B. Chief risk officer.
C. Operations management.
D. Board of directors.
Answer: D
NEW QUESTION 14
Reviewing prior audit reports and supporting workpapers before an engagement starts enables an internal auditor to do which of the following?
* 1. To understand better the activity and processes that will be audited.
* 2. To identify the audit procedures that will be used during the engagement.
* 3. To ensure that matters of greatest vulnerability will be addressed.
* 4. To use the information obtained as evidence in the current engagement.
A. 4 only
B. 1 and 3 only
C. 1 and 4 only
D. 2, 3, and 4 only
Answer: B
NEW QUESTION 17
A medical insurance provider uses an electronic claims-submission process and suspects that a number of physicians have submitted claims for treatments that
were not performed. Which of the following control procedures would be most effective to detect this type of fraud?
A. Require the physician to submit a signed statement attesting that the treatments had been performed.
B. Send confirmations to the physicians, requesting them to verify the exact nature of the claims submitted to the insurance provider.
C. Develop an integrated test facility and submit false claims to verify that the system is detecting such claims on a consistent basis.
D. Use computer software to identify abnormal claims based on the insured's age and medical history.
Answer: D
NEW QUESTION 22

Which of the following describes a key characteristic related to effective organizational communication?
A. Comprehensive supervisory and verification procedures.

B. A well-designed system of internal controls.
C. A culture of integrity and transparency.
D. Unique operating environments with varying complexity.
Answer: B
NEW QUESTION 24
According to IIA guidance, which of the following is ultimately responsible for seeing that the internal control system of an organization's social responsibility
program is effective?
A. Senior management.
B. Internal audit activity.
C. All employees.
D. Board of directors.
Answer: D
NEW QUESTION 27
Which of the following is an example of a risk management avoidance response?
A. Exiting a marketplace.
B. Recalling a product.
C. Obtaining product insurance.
D. Outsourcing production.
Answer: A
NEW QUESTION 30
Which of the following must be in existence as a precondition to developing an effective system of internal controls?
A. A monitoring process.
B. A risk assessment process.
C. A strategic objective-setting process.
D. An information and communication process.
Answer: B
NEW QUESTION 34
According to The IIA's Code of Ethics, which of the following actions violates the principle of confidentiality?
A. Accepting a consulting request in the IT department without possessing the requisite experience.
B. Providing personal tax preparation services for a fee for several employees during the lunch hour.
C. Providing a friend with the marketing strategic plan, which she will use to prepare her university thesis.
D. Agreeing to reword an observation to avoid the client complaining directly to the auditor's supervisor.
Answer: C
NEW QUESTION 38
Which of the following statements accurately describes an internal auditor's responsibility with regard to due professional care?
A. An internal auditor should express an opinion only when consensus with top management has been achieved.
B. An internal auditor's opinion should be based on experience and free of all bias.
C. An internal auditor's opinion should be based on factual evidence.
D. An internal auditor's opinion should be limited to the effectiveness of internal controls.
Answer: C
NEW QUESTION 39
During an audit, the client questions the internal audit activity's authority to perform procedures over fraud allegations. According to HA guidance, which of the
following would provide the most relevant support to respond to the client's concerns?
A. Definition of Internal Auditing.

B. MA Standards.
C. Internal audit charter.
D. The IIA's Code of Ethics.
Answer: C
NEW QUESTION 44
According to COSO, which of the following describes a principle related to the control environment?
A. The organization identifies and assesses changes that could significantly impact the system of internal control.

B. The organization establishes appropriate authorities and responsibilities in the pursuit of objectives.
C. The organization selects and develops control activities that contribute to the mitigation of risks.
D. The organization performs evaluations to ascertain whether internal control components are present and functioning.
Answer: B
NEW QUESTION 46
Which of the following is the best way to detect fraud?
A. Conduct anti-fraud training.

B. Perform background investigations.
C. Implement process controls.
D. Activate a whistleblower hotline.
Answer: D
NEW QUESTION 49
Which of the following actions best demonstrates that an internal auditor is exercising due professional care?
A. The auditor performs thorough reviews and provides absolute assurance of regulatory compliance.
B. The auditor is alert to the possibility of fraud and activities where irregularities are most likely to occur.
C. The auditor recommends improvements for all of the organization's procedures and practices.
D. The auditor is cognizant of reducing travel expenses by combining a personal vacation with a business trip.
Answer: B
NEW QUESTION 50
Which of the following is the primary engagement responsibility of an entry-level internal auditor?
A. Leadership.
B. Documentation.
C. Analysis.
D. Reporting.
Answer: C
NEW QUESTION 54
Which of the following scenarios best illustrates the principle of due professional care?
A. An internal auditor evaluates the significant risks arising from a consulting engagement.
B. An internal auditor declares that he would have a conflict of interest in providing planned audit support.
C. An internal auditor has been given sufficient authority to access documents needed to make an appraisal of an issue.
D. An internal auditor uses technology-based audit techniques to ensure that all significant risks are identified.
Answer: A
NEW QUESTION 58
Which of the following would be the most important consideration by the internal audit activity when selecting employees to perform an internal quality
assessment?
A. Their understanding of auditing standards.

B. Previous experience working with the internal audit activity.
C. Their reporting line within the organization.
D. The nature of their regular duties and responsibilities.
Answer: A
NEW QUESTION 60
According to the International Professional Practices Framework, which of the following are allowable activities for an internal auditor?
* 1. Advocating the establishment of a risk management function.
* 2. Identifying and evaluating significant risk exposures during audit engagements.
* 3. Developing a risk response for the organization if there is no chief risk officer.
* 4. Benchmarking risk management activities with other organizations.
* 5. Documenting risk mitigation strategies and techniques.
A. 4 and 5 only.
B. 1.2, and 3 only.
C. 1.2. 4. and 5 only.
D. 2. 3. 4. and 5 only.
Answer: C
NEW QUESTION 62
An internal auditor is reviewing the accounts receivable when she discovers account balances more than three years old. The auditor was previously supervising
the area during this time, and she subsequently advises the chief audit executive (CAE) of a potential conflict.

Which of the following is the most appropriate course of action for the CAE to take?
A. Replace the auditor with another audit staff member.

B. Continue with the present auditor, as more than one year has passed.
C. Withdraw the audit team and outsource the financial audit of the division.
D. Work with the division's management to resolve the situation.
Answer: A
NEW QUESTION 65
Which of the following is an example of a risk avoidance strategy?
A. Hedging against exchange rate variations.

B. Limiting access to an organization's data center.
C. Selling a nonstrategic business unit.
D. Outsourcing a high-risk activity.
Answer: C
NEW QUESTION 66
Which of the following is an example of a management control technique?
A. A budget.
B. A risk assessment.
C. The board of directors.
D. The control environment.
Answer: A
NEW QUESTION 69
When developing the organization's first risk universe, which of the following would the chief audit executive be least likely to consider?
A. The amount of risk that an organization is willing to seek or accept.

B. The extent and degree of interdependency for identified key risks.
C. The boundaries established to manage the amount of risk taken.
D. The exposure to risks following management's risk responses.
Answer: D
NEW QUESTION 73
An IT contractor applied for an internal audit position at a bank. The contractor worked for the bank's IT security manager two years ago. If the audit manager
interviewed the contractor and wants to extend a job offer, which of the following actions should the chief audit executive pursue?
A. Allow the audit manager to hire the contractor and state that the individual is free to perform IT audits, including security.
B. Not allow the audit manager to hire the contractor, as it would be a conflict of interest.
C. Allow the audit manager to hire the contractor, but state that the individual is not allowed to work on IT security audits for one year.
D. Not allow the audit manager to hire the contractor and ask the individual to apply again in one year.
Answer: A
NEW QUESTION 75
Which of the following actions would be characterized as a preventive control to safeguard inventory from the risk of theft?
* 1. Locking doors and physically securing inventory items.
* 2. Independently observing the receipt of materials.
* 3. Conducting monthly inventory counts.
* 4. Requiring the use of employee ID badges at all times.
A. 1 and 3.
B. 1 and 4.
C. 2 and 3.
D. 2 and 4.
Answer: B
NEW QUESTION 79
In which of the following functions would fraud be most likely to occur?
A. Maintaining custody of inventory records.

B. Collecting payments on accounts.
C. Approving changes to employee records.
D. Preparing customer statements.
Answer: B
NEW QUESTION 81

Internal auditors must exercise due professional care by considering which of the following?
* 1. Cost of assurance in relation to potential benefits.
* 2. Adequacy and effectiveness of governance, risk management, and control processes.
* 3. Management's competency level in the area being evaluated.
* 4. Probability of significant errors, fraud, or noncompliance.
A. 1 and 2 only
B. 1, 2, and 3 only
C. 1, 2, and 4 only
D. 2, 3, and 4 only
Answer: C
NEW QUESTION 84
To fill a critical vacancy, an internal auditor is assigned temporarily to a nonaudit role in the purchasing department, where she worked previously before joining the
internal audit activity. According to IIA guidance, which of the following statements is true regarding these circumstances?
A. The chief audit executive (CAE) should review all work performed by the auditor during her temporary assignment to ensure no impairments.
B. The CAE may conduct audits in the purchasing department during the auditor's temporary assignment.
C. The auditor should obtain the CAE's approval as to the nature and scope of the duties she is permitted to perform during her temporary assignment.
D. Any work performed by the auditor during her temporary assignment must conform to the internal audit charter.
Answer: C
NEW QUESTION 89
A large sales organization maintains a system of internal control according to the COSO model and has updated its code of conduct. This change relates to which
component of the COSO framework?
A. Control activities.
B. Information and communication.
C. Commitment.
D. Control environment.
Answer: D
NEW QUESTION 94
An organization is beginning to implement an enterprise risk management program. One of the first steps is to develop a common risk language. Which of the
following statements about a common risk language is true?
A. Management will be able to reduce inherent risk because they will have a better understanding of risk.
B. Internal auditors will be able to reduce their sample sizes because controls will be more consistent.
C. Stakeholders will have more assurance that the risks are assessed consistently.
D. Decision makers will understand that the likelihood of missing or ineffective controls will be reduced.
Answer: C
NEW QUESTION 97
An internal auditor is evaluating techniques management uses to mitigate risks within a particular product division. Which of the following is an example of risk
reduction?
A. Management sells the product division to a competitor.

B. Management outsources the product division to a third party.
C. Management allows the product division to remain unchanged.
D. Management modifies the product division to minimize errors.
Answer: D
NEW QUESTION 101

An organization decides to take no action on one of its financial risks because the cost of implementing the control outweighs the value of the asset being
protected. Which of the following best describes this risk strategy?
A. Risk avoidance.
B. Risk-benefit analysis.
C. Risk sharing.
D. Risk acceptance.
Answer: D
NEW QUESTION 104

According to IIA guidance, which of the following practices by the chief audit executive (CAE) best enhances the organizational independence of the internal audit
activity?
A. CAE reviews and approves the annual audit plan.

B. CAE meets privately with The CEO at least annually.
C. CAE meets privately with The board at least annually.
D. CAE reports to the board regarding audit staff performance evaluation and compensation.

Answer: D
NEW QUESTION 109

Which of the following scenarios best illustrates a rationalization as the root cause of potential fraud?
A. Managers who have been with the organization for several decades become aware that newly hired, younger managers are being moved more quickly into
senior positions.
B. The controller at a nationwide manufacturing company recently opted to no longer require two-week mandatory vacations for accounting staff.
C. Security cameras that monitor cash handling at the register are not functioning.
D. The organization is slowly phasing out three mature products that produce the highest commissions for the sales staff.
Answer: B
NEW QUESTION 111

According to IIA guidance, which of the following must internal auditors consider to conform with the requirements for due professional care during a consulting
engagement?
* 1. The cost of the engagement, as it pertains to audit time and expenses in relation to the potential benefits.
* 2. The needs and expectation of clients, including the nature, timing, and communication of engagement results.
* 3. The application of technology-based audit and other data analysis techniques, where appropriate.
* 4. The relative complexity and extent of work needed to achieve the engagement's objectives.
A. 1, 2, and 3
B. 1, 2, and 4
C. 1, 3, and 4
D. 2, 3, and 4
Answer: B
NEW QUESTION 115

Which of the following statements is true regarding assurance services provided to clients outside of the organization?
A. Assurance services for outside clients are not covered under the internal audit charter.
B. Assurance services for outside clients must be approved on a case-by-case basis by the board of directors.
C. The nature of assurance services for outside clients should be defined in the internal audit charter.
D. The nature of assurance services for outside clients is the same as for internal clients.
Answer: C
NEW QUESTION 118

Which of the following is most likely to be considered a control weakness?
A. Vendor invoice payment requests are accompanied by a purchase order and receiving report.
B. Purchase orders are typed by the purchasing department using prenumbered forms.
C. Buyers promptly update the official vendor listing as new supplier sources become known.
D. Department managers initiate purchase requests that must be approved by the plant superintendent.
Answer: C
NEW QUESTION 121

A large trucking organization wants to reduce traffic accidents by improving its system of internal controls. Which of the following controls is correctly classified?
* 1. Review of speeding violations to identify repetitive locations and drivers is an example of a preventive control.
* 2. Defensive driver training is an example of a directive control.
* 3. The installation of tracking devices in delivery vehicles is an example of a corrective control.
* 4. Providing a vehicle driver handbook is an example of a detective control.
A. 1 and 2.
B. 1 and 4.
C. 2 and 3.
D. 3 and 4.
Answer: A
NEW QUESTION 124

Which of the following are components of the ISO 31000 risk management process?
* 1. Setting the context.
* 2. Risk treatment.
* 3. Risk avoidance.
* 4. Communication.
A. 1 and 2 only.
B. 2 and 3.
C. 3 and 4.
D. 1,2, and 4.
Answer: A

NEW QUESTION 128

During an audit engagement, the internal auditor discussed a risk mitigation recommendation with the manager of the area under review. The manager disagreed
with the risk assessment and recommendation. The two failed to come up with an alternative solution, and the auditor decided to proceed with including the
original recommendation in the engagement report. Which of the following is especially important in dealing with this type of situation?
A. Soft skills in communication, negotiation, and collaboration.

B. Technical skills in the area under review.
C. Professional qualifications and certification in internal auditing.
D. Confidentiality and independence.
Answer: A
NEW QUESTION 131

Non-statistical sampling does not require which of the following?
A. The sample to be representative of the population.

B. The sample to be selected haphazardly.
C. A smaller sample size than if selected using statistical sampling.
D. Projecting the results to the population.
Answer: C
NEW QUESTION 135

Which of the following is considered a violation of The IIA's Code of Ethics?
A. An auditor conveys public information about an organization's financial condition.

B. An auditor reports a manager's illegal activity to senior management, rather than reporting the incident to the appropriate external authority.
C. An auditor receives allegations of fraud from a whistleblower and immediately reports the allegations to senior management.
D. An auditor reports material deficiencies, despite the fact that management is already aware of the defects.
Answer: C
NEW QUESTION 140

While auditing an organization's credit approval process, an internal auditor learns that the organization has made a large loan to another auditor's relative. Which
course of action should the auditor take?
A. Proceed with the audit engagement, but do not include the relative's information.
B. Have the chief audit executive and management determine whether the auditor should continue with the audit engagement.
C. Disclose in the engagement final communication that the relative is a customer.
D. Immediately withdraw from the audit engagement.
Answer: B
NEW QUESTION 145

Which of the following are generally recognized as essential elements of a corporate social responsibility program?
A. Human rights and the environment.

B. Organizational governance and financial reporting.
C. Fair operating practices and government regulation.
D. Consumer issues and return on investment.
Answer: A
NEW QUESTION 148

An assurance mapping exercise helps an organization do which of the following?
* 1. Provide assurance to stakeholders that risks are managed and reported, and regulatory and legal obligations are met.
* 2. Fulfill best practices in the industry.
* 3. Identify and address any gaps in the risk management process.
* 4. Identify fraud.
A. 1 and 4.
B. 1 and 3.
C. 2 and 3.
D. 3 and 4.
Answer: B
NEW QUESTION 153

Which of the following controls could an internal auditor reasonably conclude is effective by observing the physical controls of a large server room?
A. Adequate signs are in place to assist in locating safety equipment.

B. Servers are secured individually to their racks by locks.
C. Foam fire extinguishers are operable to protect against electrical fires.
D. Swipe card access is required to gain access to the server room.
Answer: A

NEW QUESTION 158

An internal auditor wants to sample data to test an audit theory in a cost-effective way. Which of the following sampling strategies should she use?
A. Statistical sampling only

B. Nonstatistical sampling only
C. A combination of both statistical and nonstatistical sampling.
D. Neither approach to testing the audit theory would be cost effective.
Answer: B
NEW QUESTION 160

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. Criteria section.
C. Effect section.
D. Cause section.
Answer: C
NEW QUESTION 165

What is the purpose of a secondary control?
A. It replaces primary controls that are either ineffective or cannot fully mitigate a risk.
B. It partially reduces the residual risk level when a key control does not operate effectively.
C. lt combines with other controls to help reduce significant risk exposures to an acceptable level.
D. It helps to ensure the completeness and accuracy of automated controls in a system environment.
Answer: C
NEW QUESTION 170

Which of the following would not be considered part of preliminary survey of an engagement area?
A. Interviews with individuals affected by the entity.

B. Functional walk through test.
C. Analytical reviews.
D. Sampling scope.
Answer: D
NEW QUESTION 175

A government agency maintains a system of internal control, according to the COSO model, and has made a change to its employee performance reviews and
rewards program. This change relates to which of the following components of COSO's internal control framework?
A. Control environment.
B. Control activities.
C. Information and communication.
D. Monitoring activities.
Answer: A
NEW QUESTION 178

Which of the following best ensures the independence of the internal audit activity?
* 1. The CEO and audit committee review and endorse any changes to the approved audit plan on an annual basis.
* 2. The audit committee reviews the performance of the chief audit executive (CAE) periodically.
* 3. The internal audit charter requires the CAE to report functionally to the audit committee.
A. 3 only
B. 1 and 2 only
C. 2 and 3 only
D. 1, 2, and 3
Answer: C
NEW QUESTION 181

According to IIA guidance, which of the following are macro-level audit activities performed for an assurance engagement of the purchasing department?
* 1. Obtain and review all purchasing-related audit reports issued within the past year.
* 2. Meet with the quality assurance group to discuss its previous reports of any purchasing-related findings.
* 3. Review a memo written by the purchasing manager that outlines ongoing problems with the purchasing
software.
* 4. Request a copy of the report from a purchasing audit conducted last year by an external service provider.
A. 1 and 2.
B. 1 and 3.

C. 2 and 4.
D. 3 and 4.
Answer: A
NEW QUESTION 182

While preparing for an audit of senior management expenses, the chief audit executive (CAE) learns that management is unable to locate a number of original
expense claims to support the related disbursements. She decides to defer the engagement until they can be located. Which of the following principles likely
guided the CAE's decision?
A. Objectivity.
B. Proficiency.
C. Independence.
D. Due professional care.
Answer: D
NEW QUESTION 183

A credit card company detects potential errors in credit card numbers by checking whether all entered numbers contain the correct amount of digits. This is an
example of which of the following IT controls?
A. Logic test.
B. Check digits.
C. Data integrity tests.
D. Balancing control activities.
Answer: A
NEW QUESTION 186

Forty-five percent of an organization's customer payments are submitted online. Eight percent of online payments are rejected. Executive management decides to
outsource its online payment services to a contractor that will assume 75 percent of the total value of rejected payments. The organization estimates $1.25 million
customer payments due during the contract period.
Which of the following represents the organization's residual risk for online customer payments due?
A. $11, 250
B. $25, 000
C. $33, 750
D. $45, 000
Answer: A
NEW QUESTION 189

Which of the following best explains why integrity is a necessary personal quality for internal auditors at all levels?
A. Internal auditor integrity enables stakeholders to constantly question the work of the internal audit activity.
B. Internal auditor integrity enables the internal auditor to avoid being challenged by any party in the organization.
C. Internal auditor integrity enables the internal audit activity to be able to demonstrate independence.
D. Internal auditor integrity enables users of internal auditors' work to make important business decisions.
Answer: D
NEW QUESTION 193

The chief audit executive (CAE) is planning to conduct an internal assessment of the internal audit activity (IAA). Part of this assessment will include
benchmarking. According to IIA guidance, which of the following qualitative metrics would be appropriate for the CAE to use?
* 1. Average client customer satisfaction score for a given year.
* 2. Client survey comments on how to improve the IAA.
* 3. Auditor interviews once an audit has been completed.
* 4. Percentage of audits completed within 90 days.
A. 1 and 2.
B. 1 and 3.
C. 2 and 3.
D. 3 and 4.
Answer: C
NEW QUESTION 197

Which of the following best describes the misdirection of payments on accounts receivable to an employee's bank account?
A. Fraud open on the books.

B. Fraud hidden on the books.
C. Fraud off the books.
D. Fraud on the balance sheet.
Answer: C

NEW QUESTION 201

Which of the following control methods is effective in reducing the risk of purchasing-scheme fraud?
* 1. Periodically reviewing the vendor list for unusual vendors and addresses.
* 2. Segregating duties for amount purchasing, receiving, shipping, and accounting.
* 3. Validating sequential integrity of purchase orders.
* 4. Verifying the validity of invoices with post office box addresses.
A. 1 and 2 only
B. 3 and 4 only
C. 1, 2, and 4 only
D. 1, 2, 3, and 4
Answer: B
NEW QUESTION 203

The security department uncovered what appears to be a complex fraud in the accounting department. The CEO has requested the internal audit activity to
investigate the fraud. If the internal audit staff lacks the expertise to conduct the investigation, how should the chief audit executive proceed?
A. Disclose the deficiency, and request that the investigation be reassigned to the first line of defense.
B. Proceed with the investigation, as internal auditors are not required to have fraud expertise.
C. Outsource the sensitive investigation to a third-party consultant with fraud expertise.
D. Select a member of the accounting department who is not involved in the fraud to join the investigation team in a consulting capacity.
Answer: C
NEW QUESTION 205

According to IIA guidance, which of the following must the internal auditor consider to meet the requirements for due professional care?
A. The training courses necessary to enhance the internal auditor's knowledge, skills, and other competencies.
B. The appropriateness of assurance procedures necessary to ensure all significant risks will be identified.
C. The use of innovative technology and data analysis techniques.
D. The extent of work needed to achieve the engagement’s objectives.
Answer: D
NEW QUESTION 208

A chief audit executive (CAE) reports functionally to the CEO and administratively to the chief financial officer, both of whom serve on the company's board of
directors. According to IIA guidance, which of the following would offer the greatest protection for the independence of the internal audit activity?
A. Appoint the CAE as a member of the board.

B. Move the CAE's functional reporting to an executive who is not on the board.
C. Obtain full board approval of the internal audit activity's annual audit plan.
D. Move the CAE's functional reporting to the audit committee.
Answer: D
NEW QUESTION 212

Which of the following statements is true about The IIA Global Internal Audit Competency Framework?
A. The core competencies outlined in the framework are not expected of a person undertaking an entry-level position as an internal auditor.
B. The framework is designed to be used primarily by chief audit executives that are developing indicators to measure the performance of the internal audit activity
for which they are responsible.
C. The framework lists the core competencies internal auditors should possess before attempting to attain The IIA's Certified Internal Auditor certification.
D. The framework describes competencies needed for individual internal auditors, but not those necessary at the chief audit executive level.
Answer: B
NEW QUESTION 217

According to the COSO enterprise risk management framework, which of the following best describes the activity that helps ensure risk responses are carried out
effectively?
A. Objective setting.
B. Control activities.
C. Information and communication.
D. Event identification.
Answer: B
NEW QUESTION 218

A chief audit executive (CAE) is selecting an internal audit team to perform an audit engagement that requires a high level of knowledge in the areas of finance,
investment portfolio management, and taxation. If neither the CAE nor the existing internal audit staff possess the required knowledge, which of the following
actions should the CAE take?
A. Postpone the audit until the CAE hires internal audit staff with the required knowledge.
B. Ask the audit committee to decide the course of action.
C. Select the most experienced auditors in the department to perform the engagement.
D. Hire consultants who possess the required knowledge to perform the engagement.

Answer: D
NEW QUESTION 220

An organization has implemented a software system that requires a supervisor to approve transactions that would cause treasury dealers to exceed their
authorized limit. This is an example of which of the following types of controls?
A. Preventive controls.
B. Detective controls.
C. Soft controls.
D. Directive controls.
Answer: A
NEW QUESTION 222

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Certified Internal Auditor - Part 1, The Internal Audit Activitys Role

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A. Usage of IT system policy.

A. Assessing the risk factors.

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A. Comprehensive supervisory and verification procedures.

A. Definition of Internal Auditing.

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A. Conduct anti-fraud training.

A. Their understanding of auditing standards.

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A. Replace the auditor with another audit staff member.

A. Hedging against exchange rate variations.

A. The amount of risk that an organization is willing to seek or accept.

A. Maintaining custody of inventory records.

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A. Management sells the product division to a competitor.

NEW QUESTION 101

NEW QUESTION 104

A. CAE reviews and approves the annual audit plan.

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NEW QUESTION 109

NEW QUESTION 111

NEW QUESTION 115

NEW QUESTION 118

NEW QUESTION 121

NEW QUESTION 124

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NEW QUESTION 128

A. Soft skills in communication, negotiation, and collaboration.

NEW QUESTION 131

A. The sample to be representative of the population.

NEW QUESTION 135

A. An auditor conveys public information about an organization's financial condition.

NEW QUESTION 140

NEW QUESTION 145

A. Human rights and the environment.

NEW QUESTION 148

NEW QUESTION 153

A. Adequate signs are in place to assist in locating safety equipment.

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NEW QUESTION 158

A. Statistical sampling only

NEW QUESTION 160

NEW QUESTION 165

NEW QUESTION 170

A. Interviews with individuals affected by the entity.

NEW QUESTION 175

NEW QUESTION 178

NEW QUESTION 181

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NEW QUESTION 182

NEW QUESTION 183

NEW QUESTION 186

NEW QUESTION 189

NEW QUESTION 193

NEW QUESTION 197

A. Fraud open on the books.

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NEW QUESTION 201