IIA IIA Certifications IIA-CIA-PART1 Questions & Answers

• Question 151:

  Which of the following actions indicates a lack of due professional care by an internal auditor performing an audit of a store's cash function?

  A. The audit report included a well-supported recommendation for a reduction in staff even though such a reduction might adversely impact morale.

  B. The auditor tested samples of transactions to test the cash function's process flows.

  C. After determining that the cash function internal controls were strong, the audit report assured senior management that fraud was not present.

  D. The auditor discovered an instance of potential fraud and reported it immediately to management, but did not alert authorities outside the organization.

  Correct Answer: C

• Question 152:

  Why is it important for the chief audit executive to periodically review the audit charter and present the results to senior management and the board?

  A. Because management requires the review to measure effectiveness of the internal audit activity.

  B. So that the individual objectivity of the internal audit staff can be more clearly established.

  C. So that there is assurance of the internal audit staff's proficiency to complete audit activities.

  D. Because changes in the organization may impair the internal audit activity's ability to meet its objectives.

  Correct Answer: D

• Question 153:

  A computer system automatically locks a user's account after three unsuccessful attempts to log on. Which type of control does this scenario represent?

  A. Corrective control.

  B. Preventive control.

  C. Detective control.

  D. Compensating control.

  Correct Answer: B

• Question 154:

  A manufacturing organization discovers that the waste water released has failed to meet permitted limits. Which control function will be least effective in correcting the issue?

  A. Performing a chemical analysis of the water, prior to discharge, for components specified in the permit.

  B. Posting signs that tell employees which substances may be disposed of via sinks and floor drains within the facility.

  C. Diluting pollutants by flushing sinks and floor drains daily with large volumes of clean water.

  D. Establishing a preventive maintenance program for the pretreatment system.

  Correct Answer: C

• Question 155:

  Which of the following controls is not appropriate for sales in a manufacturing organization?

  A. Customers' orders are recorded promptly.

  B. Goods shipped are matched with valid customer orders.

  C. Goods returned are inspected for damage by the receiving department for proper disposition.

  D. Sales department approval is required for credit sales transactions.

  Correct Answer: D

• Question 156:

  Which of the following actions does not violate the IIA Code of Ethics or Standards?

  A. An internal auditor performing an audit on an operation that they managed less than a year ago.

  B. An internal auditor performing an audit on procedures that they were responsible for creating.

  C. An internal auditor disclosing details of an audit report to colleagues from a different organization.

  D. An internal auditor disclosing confidential information in response to a lawsuit.

  Correct Answer: D

• Question 157:

  An organization has implemented a new automated payroll system that contains a table of pay rates that are matched to employee job classifications. Which control should an internal auditor suggest in order to ensure that the table is updated correctly, and is used only for valid pay changes?

  A. Restrict data-table access from management and line supervisors who have the authority to determine pay rates.

  B. Require a supervisor in the department, who has the ability to change the table, to compare the changes to a signed management authorization.

  C. Ensure that adequate edit and reasonableness checks are built into the automated system.

  D. Require a manager, who is independent of the system and who cannot change the table, to authorize and sign-off on any employee pay changes.

  Correct Answer: D

• Question 158:

  After being terminated due to downsizing, an internal auditor finds a different job with an organization in the same industry. Which of the following actions would violate the IIA Code of Ethics?

  A. To determine audit priorities in the new job, the auditor uses the audit risk approach that the auditor's previous employer used, without receiving permission to do so.

  B. At the new organization, the auditor is asked to develop forms to implement probability- proportional-tosize sampling. Although unsure of how to perform this type of sampling, the auditor proceeds without asking for assistance.

  C. In preparing for an audit at the previous organization, the auditor had conducted a great deal of research on the Internet at home to identify best practices for the management of a treasury function. The auditor has retained much of the research and uses it to conduct an audit of the new employer's treasury function.

  D. In the first week at the new organization, the auditor discovers a high fraud risk surrounding the organization's database and suggests that the information technology department implement a new

  password system to prevent fraudulent actions before they occur.

  Correct Answer: B

• Question 159:

  Which of the following scenarios exemplifies a potential internal control weakness?

  A. The same employee who receives cash from customers prepares a prelisting of cash receipts.

  B. The same employee who records cash receipts in the accounts receivable subsidiary ledger ensures that the ledger automatically updates the information.

  C. The same employee who restrictively endorses checks received from customers prepares the bank's check deposit slips.

  D. The same employee who makes deposits at the bank prepares the monthly bank reconciliation.

  Correct Answer: D

• Question 160:

  Management of a publicly-held organization requires the internal audit activity to be involved with quarterly financial statements, which are made public and used internally. Which of the following explanations of management's decision is least plausible?

  A. Management may be concerned about its reputation in the financial markets.

  B. Management is following best-practice protocol, as stipulated by the Standards, which states that internal auditors must review quarterly financial statements.

  C. Management may be concerned about potential penalties that could occur if quarterly financial statements are misstated.

  D. Management may perceive that having quarterly financial information examined by the internal auditors enhances the information's value to internal decision making.

  Correct Answer: B