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Master the IIA IIA-CIA-Part1 Exam: Essential Study Tips and Strategies

Questions 31

The internal audit activity is responsible for conducting fraud investigations. A potential fraud instance was identified during an audit engagement. The chief audit executive appoints a lead investigate. Which of the following would most likely be the next step?

Options:

A.

Ask internal auditors to gather all relevant information evidence

B.

Identify and interview witnesses first potential suspects later.

C.

Conduct a fraud risk assessment to the most vulnerable areas.

D.

Determine me competencies needed and assess whatever team members have a conflict of interest.

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Questions 32

The accounting department asked the chief audit executive (CAE) to perform a review of suspicious transactions The CAE was an accounting manager for the organization six months ago How should she respond to the request?

Options:

A.

Decline, if it is consulting engagement because she recently worked in the organization s accounting department

B.

Accept, 11 is an assurance engagement, as she has been out of the department long enough to not impair objectivity.

C.

Inform the accounting department mat me engagement can take place m the future once she has been removed from accounting for a longer period of time.

D.

Accept, it is a consulting engagement with agreed-upon scope and services to be provided by me internal audit activity.

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Questions 33

A whistle blower notified internal audit of a conflict of interest between an organization's employee and a major supplier. Which of the following steps should be undertaken first?

Options:

A.

Interview the employee identified by the whistleblower.

B.

Attain an understanding of the employee's role, responsibilities, and relationship with the supplier.

C.

Notify senior management, the board, and the external auditor about the alleged fraud

D.

Review all the orders issued to the supplier to investigate potential fraud.

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Questions 34

Which of the following scenarios depicts an appropriate role for the internal audit activity to take regarding an organization's risk management process?

Options:

A.

Internal audit designs and implements the organization's controls to help manage risk.

B.

Internal audit sets the organization's risk tolerance and promotes awareness throughout the organization.

C.

Internal audit assesses whether the organization's risk management processes are effective.

D.

Internal audit is responsible for safeguarding the organization's assets and preventing loss from occurring.

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Questions 35

In which of the following situations would the organizational independence of an internal audit activity be impaired?

Options:

A.

The chief audit executive reports administratively to the CEO.

B.

Scope limitations are imposed on internal audits.

C.

The internal audit activity provides assurance services for an activity for which the engagement supervisor had responsibility within the previous year.

D.

The compensation committee of the board approves the remuneration of the chief audit executive.

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Questions 36

An engagement supervisor noticed that a newly hired internal auditor struggles with large data samples because he appears reluctant to apply available spreadsheet statistical functions and tends to perform testing of transactions manually In which of the following areas does the internal auditor most likely need training?

Options:

A.

Critical thinking.

B.

International Professional Practices Framework

C.

Professional ethics

D.

Business acumen

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Questions 37

According to IIA guidance, which of the following statements is true regarding risk management in an organization?

Options:

A.

The risk management function has the sole responsibility for identifying and managing risks in all departments

B.

Risk management is a core responsibility of the internal audit activity

C.

The internal audit activity should consider the organization’s maturity, structure, and the competitive environment to establish the organization’s risk appetite

D.

The internal audit activity may use a risk management or control framework to assist in risk identification

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Questions 38

A whistleblower reveals to the chief audit executive (CAE) detailed allegations of potential fraud at the senior management level. Although the CAE has some experience in the area, she chooses to retain an external fraud expert to conduct the investigation. When asked by the director of finance to defend the expenditure, which of the following statements represents the CAE's best response?

Options:

A.

The CAE refers to the Standards and explains that to protect her independence, she needs to remain isolated from the investigation.

B.

The CAE refers to the Standards and explains that the internal audit activity must obtain competent assistance if needed.

C.

The CAE refers to the Standards and explains that to protect her objectivity, she needs to remain isolated from the investigation.

D.

The CAE describes the specifics of the allegation to underscore the importance of the situation and the need for expert investigation

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Questions 39

Which of the following best describes the type of organizational culture known as adaptability culture'?

Options:

A.

A results-oriented culture that values competitiveness and personal initiative

B.

A culture that emerges in quick-response and high-risk decision-making environments

C.

A culture that is characterized by low involvement with environmental and health issues

D.

A culture that places high value on participation and meeting the needs of employees.

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Questions 40

According to IIA guidance, which of the following is most critical to ensuring that an organization's risk management program remains effective over time?

Options:

A.

Ensuring a fully executed assurance role for the internal audit activity.

B.

Conducting risk evaluations that include ranking the relative importance of each risk.

C.

Establishing a risk management function and appointing a chief risk officer.

D.

Conducting a combination of ongoing risk reviews and individual evaluations.

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Questions 41

Which of the following actions taken during an audit engagement is the best demonstration of an internal auditor's due professional care?

Options:

A.

Ensure that all financial information related to the engagement is included in the audit plan and examined for irregularities.

B.

Document all audit tests completely.

C.

Consider the possibility of noncompliance or irregularities at all times during an engagement.

D.

Notify the audit committee of any noncompliance or irregularity discovered during an engagement

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Questions 42

An internal audit team analyzed the organization's value-at-risk model during an assurance engagement and suggested several useful improvements. Management was impressed by the internal audit team’s work and requested additional actions. Which of the following requested actions would impact internal audit independence most severely if fulfilled?

Options:

A.

Assess the effectiveness of the model at least semi-annually.

B.

Modify model inputs and suggest courses of action based on outcomes.

C.

Employ acquired experience to test other models used by the company.

D.

Validate whether model outputs serve the purpose stated by the model.

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Questions 43

A significant number of employees expressed concerns of a hostile work environment within a large manufacturing plant, which is in contrast to the organization's stated culture of tolerance and open communication. Which of the following approaches would be most effective for an internal auditor to assess whether the organization supports a culture of tolerance and open communication?

Options:

A.

Assess plant employees' social media activity for specific messages related to tolerance and open communication

B.

Compare plant employees’ compensation and benefits with those at similar sized organizations that have a stated culture of tolerance and open communication.

C.

Evaluate organization policies and procedures for references related to encouraging tolerance and open communication.

D.

Conduct a meeting with all plant employees and management to discuss tolerance and open communication

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Questions 44

According to IIA guidance, which of the following best describes expense reimbursement fraud?

Options:

A.

Theft of cash after it is recorded in the books

B.

Theft of cash before it is recorded in the books

C.

Theft of assets through fictitious or inflated invoices

D.

Theft of assets through false mileage travel logs and meal charges

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Questions 45

Which of the following should catch the internal auditor's attention as a potential red flag for fraud?

Options:

A.

The accounting unit keeps detailed records and preserves supporting documentation in excess of company requirements

B.

One of the subsidiaries has more bank accounts than any other comparable subsidiary

C.

The same external audit firm has been with the company for three years without rotation

D.

The arithmetic median tenure of employees working at production facilities is 15 years

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Exam Code: IIA-CIA-Part1
Exam Name: Essentials of Internal Auditing
Last Update: Jul 19, 2024
Questions: 691

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