IIA IIA Certifications IIA-CIA-PART1 Questions & Answers

• Question 471:

  Regarding an organization's decision to retain an external audit firm, the chief audit executive (CAE) should:

  A. Work with the organization's chief financial officer to evaluate the external auditor's performance and together make the decision.

  B. Not be involved in this decision process as it would compromise the CAE's objectivity.

  C. Evaluate the external auditor's performance and retain the external auditor if quality and cost criteria are met.

  D. Assist the audit committee by facilitating the development of an appropriate evaluation process.

  Correct Answer: D

• Question 472:

  In an assurance engagement of treasury operations, an internal auditor is required to consider all of the following issues except:

  A. The audit committee has requested assurance on the treasury department's compliance with a new policy on the use of financial instruments.

  B. Treasury management has not instituted any risk management policies.

  C. Due to the recent sale of a division, the amount of cash and marketable securities managed by the treasury department has increased by 350 percent.

  D. The external auditors have indicated some difficulties in obtaining account confirmations.

  Correct Answer: D

• Question 473:

  Which of the following should be incorporated in a risk management policy?

  I. Boundaries and limit structures.

  II. Requirements for reporting risk.

  III.

  Risk authorities.

  A.

  I and II only

  B.

  I and III only

  C.

  II and III only

  D.

  I, II, and III.

  Correct Answer: D

• Question 474:

  Which is the least effective form of risk management?

  A. Systems-based preventive control.

  B. People-based preventive control.

  C. Systems-based detective control.

  D. People-based detective control.

  Correct Answer: D

• Question 475:

  Which of the following is a role of the board of directors in the governance process?

  A. Conduct periodic assessments of the organization's governance systems.

  B. Obtain assurance concerning the effectiveness of the organization's governance systems.

  C. Implement an effective system of internal controls to support the organization's governance systems.

  D. Review and approve operational goals and objectives.

  Correct Answer: B

• Question 476:

  Which of the following represents the correct order of the risk management process?

  A. Resource allocation, risk management metrics, risk assessment, post-mortem analysis, effective communication.

  B. Risk management metrics, resource allocation, risk assessment, effective communication, post-mortem analysis.

  C. Risk assessment, resource allocation, risk governance and reporting, post-mortem analysis, feedback.

  D. Resource allocation, risk monitoring, risk assessment, feedback, post-mortem analysis.

  Correct Answer: C

• Question 477:

  Which of the following represents the most effective governance structure?

  I. Operating Executive Internal Management Management Auditing Responsibility for risk Oversight role Advisory role

  II. Oversight role Responsibility for risk Advisory role

  III. Responsibility for risk Advisory role Oversight role

  IV.

  Oversight role Advisory role Responsibility for risk

  A.

  I Only

  B.

  II

  C.

  III

  D.

  IV

  Correct Answer: A

• Question 478:

  In order to provide the most useful information for an organization's risk management decisions, which of the following should be assessed?

  A. Risk levels for future events based on the degree of uncertainty of those events and their cost of mitigation.

  B. Inherent and control risks and their impact on the extent of financial misstatements.

  C. Risk levels of current and future events, their effect on the achievement of the organization's objectives, and their underlying causes.

  D. Risk levels of current and future events, their impact on the organization's mission, and the potential for the elimination of existing risk factors.

  Correct Answer: C

• Question 479:

  In developing an appropriate work program for an audit engagement, the most important factor for an audit supervisor to consider is the:

  A. Availability of records and data.

  B. Potential impact of risks.

  C. Capabilities of audit personnel.

  D. Time required to complete the engagement.

  Correct Answer: B

• Question 480:

  Organizations that use a highly structured command-and-control management approach are at greater risk of:

  A. Delayed response due to the inability to reach consensus among decision makers.

  B. Negative consequences that result from lower-level staff's unwillingness to confront errors by superiors.

  C. Erosion of staff morale due to perceptions of ineffective leadership.

  D. Waste and abuse of organizational resources resulting from management override of controls.

  Correct Answer: B