IIA IIA Certifications IIA-CIA-PART1 Questions & Answers

• Question 431:

  An internal audit activity's work schedule should always provide sufficient information to the audit committee to enable it to determine whether the proposed engagements:

  A. Support the organization's objectives.

  B. Include sufficient fraud awareness.

  C. Will likely result in the detection of any major risk exposures.

  D. Are likely to detect control deficiencies.

  Correct Answer: A

• Question 432:

  The audit committee has asked the chief audit executive (CAE) to assist in the selection of a new external audit firm. Which of the following is an appropriate action by the CAE?

  A. The CAE and two managers from the audit staff review the bids and select one firm to meet with the audit committee for the committee's approval.

  B. The CAE develops a formal set of criteria for the audit committee to use in selecting the external auditor.

  C. The CAE, chief financial officer, and controller review the bids, interview two firms, and recommend one of the two firms to the audit committee for its approval.

  D. The CAE declines to participate in the process because providing this assistance would result in compromising the internal audit activity's objectivity.

  Correct Answer: B

• Question 433:

  An organization's external auditor has prepared a list of risks and issues and has recommended to senior management that the internal audit activity focus on these items. Senior management has forwarded the list to the chief audit executive (CAE). The CAE should:

  A. Incorporate the external auditor's requirements into the internal audit plan.

  B. Ignore the external auditor's requirements because they are outside of the internal audit activity's planned scope of work.

  C. Consider the issues raised by the external auditor for possible inclusion in the planned scope of work.

  D. Report the risks and issues to the audit committee for possible future attention.

  Correct Answer: C

• Question 434:

  An organization receives the most value from an internal audit activity's enterprise-wide risk assessment when the auditor:

  A. Focuses primarily on enterprise-level risks.

  B. Considers activities at all levels of the organization.

  C. Reviews special projects and new initiatives.

  D. Validates supporting financial and operational data.

  Correct Answer: B

• Question 435:

  In the annual audit of the financial statements of a company with high inherent risk and a very strong control system, the external auditor may be able to allow detection risk to rise because.

  A. Audit risk has been reduced.

  B. Control risk has been assessed at a lower level.

  C. The company's operations are very susceptible to misstatements.

  D. Whenever inherent risk is high, control risk is disregarded.

  Correct Answer: B

• Question 436:

  An internal quality assessment of the internal audit activity should provide the chief audit executive with.

  A. Recommendations for improvement.

  B. Objectives for internal audit engagements.

  C. Confirmation of action on past audit recommendations.

  D. Appraisals of internal audit staff performance.

  Correct Answer: A

• Question 437:

  A bank uses a risk analysis matrix to quantify the relative risk of auditable entities. The analysis involves rating auditable entities on risk factors using a scale of 1 to 10, with 10 representing the greatest risk. A partial list of risk factors and the ratings given to three of the bank's departments is provided below:

  Department Risk Factor A B C Control structure Nature of assets in department Dollar value of assets Complexity of transactions Which of the following statements regarding risk in the departments is true?

  A. As compared to departments A and C, department B has a stronger control system to compensate for the greater complexity of the department's transactions and dollar value of its assets.

  B. The internal audit activity should schedule audits of department B more often than audits of department

  C because of the relative control strength of department C as compared to department C.The nature of department A's control structure may be justified by the nature of the department's assets and the complexity of its transactions.

  D The relative ranking of the departments in order of their risk, from greatest to least risk, is: A; C; B.

  Correct Answer: C

• Question 438:

  To ensure that due professional care has been taken during an audit engagement, an internal auditor should always:

  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.

  Correct Answer: C

• Question 439:

  When using a risk assessment model to develop audit plans, it is essential that the chief audit executive take into account the:

  A. Results of the last audit.

  B. Planned visits by the external auditors during the upcoming year.

  C. Recent or expected changes in management direction and objectives.

  D. Dates of future board meetings.

  Correct Answer: C

• Question 440:

  Which of the following would have the least impact (either positive or negative) on an assessment of a department's control environment?

  A. The department managed long-term investments, including investment in derivatives and other financial instruments, to maximize return.

  B. The department manager sets a tone of honesty and integrity in all business dealings and this tone is emulated by department personnel.

  C. Many department functions were duplicated or verified by other department employees as part of the department's normal procedures.

  D. Audit tests designed to verify compliance with control procedures detected a general failure to follow standard procedures for transaction authorization.

  Correct Answer: A