While conducting fieldwork, an internal auditor decides to utilize standard operating procedure (SOP) questionnaires to gather information about a human resources department. Which of the following is an advantage of this method?
A. SOP questionnaires verify that a department is efficient and effective.
B. SOP questionnaires generally do not need to be cleared by management of the audited department.
C. SOP questionnaires are useful in identifying discrepancies and educating clients.
D. SOP questionnaires are the most comprehensive technique for data gathering in fieldwork.
Which of the following is an advantage of email surveys compared to face-to-face interviews?
A. They are less expensive.
B. They have higher rates of response.
C. Survey designers are able to use a broader variety of questions.
D. Respondents can easily get clarification on questions from survey designers or interviewers.
Which of the following examples best describes how an internal auditor should behave while listening to an engagement client talk about human resource process problems?
A. The auditor should gather their thoughts in order to have a response immediately ready for the client.
B. The auditor should integrate the information the client provides with the information that is already known.
C. The auditor should make an internal note of the client's gestures, demeanor, and body language, rather than paying close attention to the content of the discussion.
D. The auditor should mentally plan the next steps of the audit engagement.
Which of the following is the best method for testing the accuracy of a computer program's calculation of shipping charges?
A. Use either test data or parallel simula-tion to test the computer program.
B. Use generalized audit software to select a monetary-unit sample of invoices that have been billed to customers.
C. Select transactions from invoices with shipping charges using difference estimation.
D. Select transactions from invoices with shipping charges using discovery sampling.
Which of the following statements is not true about red flags?
A. It can be challenging to quantify red flags.
B. There is a scarcity of established literature on red flags.
C. Red flags can point auditors to intentional wrongdoing, errors and omissions, inefficiency, and conflicts of interest.
D. Red flags do not necessarily mean that fraud exists.
In which of the following circumstances would an internal auditor not need to search for other signs of fraud?
A. The organization has an unusually high increase in costs.
B. There are several substantial weaknesses with the internal control structure.
C. Management institutes a policy of paying vendors promptly in order to avoid incurring penalty charges.
D. One of the employees seems to have had a dramatic increase in their standard of living.
Which of the following procedures would be most effective in detecting fraud in electronically- submitted claims to insurance companies?
A. Creating a monitoring program that detects unusual claims to be investigated by the claims department.
B. Using generalized audit software to match the claimant identification number with a master list of valid policyholders.
C. Testing the accuracy of processing by using integrated test facilities.
D. Creating batch controls over all claims arriving from a particular organization and process those claims separately.
Which of the following factors would cause an internal auditor to judge an account balance error to be material?
A. The error involves an unusual transaction for the organization.
B. The error pertains to an unverified transaction that is routine.
C. The error concerns a data input function.
D. The error involves a large percentage of net income.
In an audit engagement, a group of internal auditors used an integrated test facility to test payroll processing. The auditors identified the key controls and processing steps in the computer software, and then developed test data. Over the course of 24 months, they submitted test transactions on a regular basis but did not find any differences between payroll processing and integrated test facility results. Based on the data, what can the auditors conclude?
A. Payments to employees during the 24-month period were all correct.
B. The computer application and its control procedures correctly processed payroll over the 24- month period.
C. Employees are properly submitting their hours to payroll.
D. The computer software is flawed.
In order to be organizationally independent, the chief audit executive should report administratively to the [List A] and functionally to the [List B].
[List A] [List B]
A. Audit committee Board of directors
B. Chief executive officer Board of directors
C. Chief executive officer Chief financial officer
D. Audit committee Chief financial officer
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