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

Questions 76

An automobile manufacturer will become one of the first in the industry to adopt a new inventory management software. Despite the system being new to the market, senior management believes that the benefits are great enough to offset the potential risks. Which of the following aspects of risk management does senior management’s decision best illustrate?

Options:

A.

Residual risk.

B.

Inherent risk.

C.

Risk tolerance.

D.

Risk appetite.

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Questions 77

According to IIA guidance, which of the following statements is true regarding internal auditors' knowledge, skills and other competencies?

Options:

A.

The chief audit executive (CAE) must obtain competent advice and assistance if the internal audit activity lacks the knowledge, skills, or other competencies needed to complete the audit engagement

B.

Internal auditors must have sufficient knowledge to evaluate the risk of fraud and the manner in which it is managed by the organization and should have the expertise of a fraud investigator

C.

Internal auditors need to have basic knowledge of key IT risks and controls and available technology-based audit techniques in order to perform their assigned work

D.

The CAE must refuse a consulting engagement if the internal audit activity lacks the knowledge, skills, or other competencies needed to perform all or part of the engagement

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Questions 78

Which of the following is an example of an entity-level control pertaining to the finance area of an organization'?

Options:

A.

Key account reconciliation such as bank reconciliation

B.

Segregation of duties between posting and reviewing journal entnes

C.

A signing authority matrix for spending approvals

D.

The establishment of a finance and audit committee

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Questions 79

According to ISO 31000, which of the following statements is correct?

Options:

A.

The board is responsible for setting the organizational attitude through tone at the top,

B.

The internal audit activity will provide assurance over operating effectiveness but not over the design of risk management activities,

C.

The internal audit activity can give objective assurance on any part of the risk management framework for which it is responsible.

D.

The framework is designed to be effective for organizations no matter how small.

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Questions 80

When would on-the-job training be more effective?

Options:

A.

When participants already have a certain degree of experience and knowledge.

B.

When it makes up the largest part of the training budget.

C.

When it includes ongoing feedback and coaching from experienced team members.

D.

When it is standardized for the whole entire staff.

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Questions 81

With regard to organizational governance assurance, which of the following is an appropriate role for the internal audit activity'?

Options:

A.

Assess compliance with the organization's code of conduct

B.

Oversee the governance and risk management processes

C.

Initiate new organizational control processes

D.

Provide advice on organizational governance activities

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Questions 82

Which of the following actions should an organization take to detect an emerging risk of potential fraud?

Options:

A.

Adopt reward and recognition programs that promote good behaviors

B.

Undertake background checks for new employees as part of the hiring process

C.

Establish an anonymous platform for reporting suspected unethical behaviors

D.

Institute periodic educational training on expected ethical behaviors

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Questions 83

Which of the following statements is true regarding the independent peer review process undertaken to fulfill the requirement for an external quality assessment?

Options:

A.

Two individuals in the same internal audit activity may perform an independent peer review as long as they do not report to the same audit manager

B.

Individuals from a separate but related organization such as an affiliate may perform peer reviews

C.

Individuals working in separate internal audit activities may be considered independent as long as do not report to the same chief audit executive

D.

Peer reviews are generally less cost-effective than hiring an external quality assessor

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Questions 84

An internal audit activity uses a rotational program to recruit high-performing staff members from other parts of the organization One of these individuals is nearing the end of her four-year internal audit rotation The chief audit executive assigned her to an assurance engagement in the business area she will be going into when she leaves the internal audit activity Which of the following statements is

true regarding this scenario?

Options:

A.

Accepting the assignment is a violation of internal audit independence

B.

Accepting the assignment will improve competencies and develop relationships that will be needed in her next assignment

C.

Accepting the assignment creates the appearance of an impairment to her professional judgment and detectivity

D.

Accepting the assignment on the assurance engagement would be a breach of due professional care

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Questions 85

The internal audit activity is undergoing a self-assessment as part of its quality assurance and improvement program Which of the following observations must be addressed in order for the internal audit activity to achieve conformance with the Standards?

Options:

A.

The internal audit charter does not identify which audit services are outsourced

B.

The internal audit charter has not been reviewed by the legal department

C.

The internal audit charter has not been approved by the board within the past year

D.

The internal audit charter does not describe the authority of the internal audit activity

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Questions 86

Which of the following statements relating to risk management is true?

Options:

A.

The high-level risk assessment performed during engagement planning is a detailed step-by-step analytical process

B.

External auditors must be engaged to evaluate the potential for fraud and how the organization manages fraud risk

C.

A lack of controls is acceptable if the risk is reduced to an acceptable level in some other way

D.

Internal auditors are responsible for managing the risks of the organization

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Questions 87

Which of the following is most likely to impair the organizational independence of the internal audit activity?

Options:

A.

The chief audit executive (CAE) reports administratively to the chief financial officer.

B.

The CAE oversees the effectiveness of the organization’s risk management function.

C.

The CAE reports functionally to the CEO.

D.

The CAE managed the finance department for the past five years.

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Questions 88

Senior management relies on the professional judgment of an internal auditor and uses outcomes of her audit work to make business decisions Which of the following personal qualities displayed by the internal auditor is most likely the foundation for this relationship?

Options:

A.

Integrity

B.

Negotiation skills.

C.

Business acumen

D.

Flexibility

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Questions 89

Which of the following is an example of an impairment to an internal auditor's independence?

Options:

A.

An internal auditor delays reporting material financial statement audit findings until after his parents sell all of their stock in the company

B.

Following the restructuring of the organization, the internal audit activity now reports functionally to the chief financial officer

C.

A new member of the internal audit activity, who was the accounts payable supervisor for two years, is asked to consult on the implementation of a new accounts payable system

D.

Believing there must be errors in a given balance sheet account the internal auditor decides to expand his testing

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Questions 90

Which of the following strategies for professional development best demonstrates an internal auditor’s competency'?

Options:

A.

Completed education credits

B.

Membership in professional organizations

C.

Subscriptions to sources of relevant professional information

D.

Professional development and training plans

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Exam Code: IIA-CIA-Part1
Exam Name: Essentials of Internal Auditing
Last Update: Jul 24, 2024
Questions: 691

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