Online IIA-CIA-Part1 Exam Dumps Help You Build Confidence

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March 30, 2023

Practicing with Certified Internal IIA-CIA-Part1 exam dumps questions can help you build confidence and reduce exam anxiety. By familiarizing yourself with the types of questions you can expect to see on the IIA-CIA-Part1 CIA Exam Part One: Essentials of Internal Auditing exam and mastering the concepts and skills required to answer them, you can approach the exam with greater confidence and a sense of calm. Besides, IIA-CIA-Part1 dumps questions can help you achieve this level of knowledge and confidence. Study free IIA IIA-CIA-Part1 exam dumps below.

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1. In its five years of existence, an internal audit activity conducted a single internal assessment of its quality assurance and improvement program (QAIP). The results of that assessment showed that the internal audit activity did not conform with the Standards. Prior to this, an external assessment of the internal audit activity's QAIP was conducted, which reported that the internal audit activity was in conformance with the Standards. Considering the two assessments, what would be the internal audit activity's current state of conformance with the Standards?

Conformance with the Standards.

Nonconformance with the Standards

Unable to determine conformance with the Standards.

Partial conformance with the Standards

2. Guidelines need to be set for various levels of suspected fraud within an organization and when it would be reported to the audit committee.

Which of the following would be

reported at the next meeting?

Minor theft of less than $10,000, not involving senior management.

Theft using collusion for more than $10,000. but not involving senior management.

Denial of access to requested employees during an audit.

Discussion of replacement of the chief audit executive.

3. Which of the following is considered to be a threat to the internal auditor's objectivity?

The auditor drafted the operational procedures of the area that she is currently auditing.

The auditor received a bonus that was approved by the board of directors.

The assigned auditor recommended operational procedures for the organization.

The assigned auditor rotated out of the same business activity three years ago

4. According to MA guidance, which of the following best describes how often the chief audit executive should review the quality assurance and improvement program of the internal audit activity?

Whenever the business objectives of the organization change

Just prior to an external assessment of the internal audit activity

At the completion of each engagement.

Progressively on a day-to-day basis

5. During a complex financial compliance engagement, a senior internal auditor determines that current audit procedures are not sufficient for adequate testing She consults with a colleague and learns that a spreadsheet application contains a helpful tool She proceeds to use the tool to properly complete the evaluation Which of the following best describes the core competency displayed by the senior auditor?

Business acumen

Persuasion and collaboration

Critical thinking

Communication

6. Senior management has requested that the internal audit activity review and amend policies where necessary when auditing the purchasing department. To which of the following would the chief audit executive most likely give primary consideration when responding to this request?

Auditor competency.

Internal audit independence.

Auditor objectivity.

Engagement scope.

7. Which of the following scenarios best demonstrates the application of internal audit proficiency?

Management requests that the internal audit activity review and provide feedback on its strategic plans for a merger, but the chief audit executive (CAE) declines the engagement due to the team's lack of experience with mergers.

A CAE reassigns auditors from other audits to perform testing on all of the fixed asset additions for a period, including amounts below the materiality level stated by external auditors.

Due to the routine and recurring nature of bank branch audits, an audit manager often excludes detailed planning at the beginning of the audit and immediately performs fieldwork.

During fieldwork, an auditor observed a lack of segregation of duties over cash management. The auditor reported this observation to his supervisor, who decided that the area should be examined in a subsequent audit.

8. According to IIA guidance, which of the following statements is true regarding the internal audit activity's quality assurance and improvement program (QAIP)?

Internal assessments rely solely on the review of completed audit engagements for demonstrated performance.

The chief audit executive is responsible for assessing the suitability and competence of an external assessor.

QAIP results must first be discussed with the board and approval obtained for distribution to senior management.

At the board's discretion, the frequency of external assessments can exceed the five-year guideline.

9. While preparing the audit plan for an automobile manufacturing company, the chief audit executive (CAE) noted that the company's engineering department received a high risk ranking. However, the internal audit activity is understaffed, and current staff do not possess the necessary skills to adequately assess the effectiveness of the engineering department.

What is the most appropriate course of action for the CAE to take?

Include the engineering department on the audit plan, use the available internal audit resources to conduct the review, and exclude procedures that cannot be adequately assessed.

Advise management to accept the assessed risk until the internal auditors are able to review the area adequately.

Recruit internal auditors with the required competencies and wait until they are employed before including this audit on the internal audit plan.

Proceed with a review of the engineering department but supplement the internal audit team with nonauditors from an external engineering company who have the required skills to assist

10. The organization's internal audit charter was last updated six years ago. To update the charter, which of the following actions is most appropriate for the chief audit executive to take?

Wait for the next external assessment and address all of the missing information in the charter based on the recommendations from the external assessment team.

Perform a review of IIA guidance to become acquainted with the latest mandatory elements prior to updating the charter

Use an internal audit charter template from another organization that operates within the same industry.

Identify an individual within the internal audit activity who has in-depth knowledge of mandatory IIA guidance elements to address any gaps or areas of the current version of the charter that could be improved.

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11. According to IIA guidance, which of the following would be included in an internal audit charter to help establish the authority of the internal audit activity?

Outline expectations for communicating the results of all aspects of the internal audit activity.

Declare the internal audit activity’s accountability for safeguarding assets and confidentiality.

Document the chief audit executive’s (CAE's) reporting line

Document agreement between the CAE and the individual to whom the CAE reports

12. 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?

Integrity

Negotiation skills.

Business acumen

Flexibility

13. According to IIA guidance, which of the following is an appropriate role for the internal audit activity?

Coaching management in responding to risks.

Implementing risk responses on management's behalf.

Imposing risk management processes.

Setting the risk appetite.

14. Tr» chiet audit executive (CAE) of large organization is preparing job descriptions to hire five new general internal audit staff, two new IT auditors and a senior auditer how is the CAE likely to describe IT requirements for me general internal audit statt positions?

The candidate must be able to apply data analytics tolls methodologies

The candidate must be able to evaluate IT governance and cybersecurity frameworks.

The candidate must be able to understand IT-elated risk and general controls

The candidate must be able to execute web servers, applications, and databases testing procedures.

15. Which of the following is a limitation of detective internal controls in fraud management?

Implementation costs tend to be higher than the expected benefits.

They tend to be easy for fraudsters to circumvent.

They are not designed to improve efficiency of operations.

They are not effective in preventing fraud.

16. Which of the following is true regarding the stakeholder theory of corporate social responsibility?

An organization has a fiduciary duty to put shareholders' needs first

Customers' needs are the primary responsibility of the organization

Competitors are considered stakeholders of the organization

Employees are the organization's best assets and primary responsibility

17. Which of the following describes the most appropriate match between a potential temporary guest auditor candidate and an upcoming audit assignment?

A purchasing manager with two years of prior audit experience in public practice to lead a contracts management audit

A communications officer who worked in the marketing department during the last six months to conduct a customer loyalty program audit

A manager of social responsibility who has a nursing background to participate m a health and safety audit for the corporate office and plant facilities

An accounting manager who discovered and reported fraud committed by a payables clerk to conduct a performance audit of accounts payable

18. During the audit of taxation processes in the organization internal auditors have verified that all employees of the finance department received training on taxation guidelines. The training is mandatory and is automatically assigned via email invitation to all new employees in the department.

Which type of controls have the auditors tested?

Directive

Preventive

Detective

Automatic

19. Which of the following engagements would be considered an appropriate consulting service?

The internal audit activity of a commercial bank routinely performs branch audits for compliance with regulations.

The internal audit activity participates in a cosourcing arrangement with an IT audit firm to test information systems security.

The internal audit activity facilitates biannual training of the risk management team in risk identification methodologies.

The internal audit activity partners with external auditors annually to complete fieldwork required as a part of the external audit exercise.

20. What is expected of internal auditors in regards to due professional care?

Auditors perform assurance services without regard to cost

Auditors perform assurance services effectively to identify all risks

Auditors perform assurance services needed to achieve the engagement's objectives

Auditors perform assurance services to guarantee all significant risks will be addressed

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21. Which of the following internal controls best mitigates the risk of corruption schemes between employees and vendors?

Establishing policies that prohibit an employee from receiving gifts from an interested party.

Having employees sign annual attestations that they adhere to the organization's code of ethics.

Having strong management oversight of the purchasing and accounts payable functions.

Conducting regular examinations of documentation both paper and electronic.

22. Who has the ultimate responsibility of implementing the organization’s governance system?

Stakeholders

The board

The chief executive officer

Internal auditors

23. A multinational organization has asked the internal audit activity to assist in setting up the organization’s risk management system. The chief audit executive (CAE) agrees to take on the engagement as a consultant.

Which of the following tasks is appropriate for the CAE to undertake?

Coordinate and facilitate risk workshops for management to attend.

Establish the degree of risk appetite for management to accept.

Set risk indicators and mitigation plans for management to implement

Determine the number of significant risks for management to report to the board.

24. In which of the following scenarios would it be appropriate for the chief audit executive (CAE) to report that the internal audit activity conforms with the Standards?

It A new internal audit activity was formed four years ago. An external assessment was never performed, but successive internal assessments were performed and support the conclusion that the internal audit activity conforms with the Standards

An internal self-assessment completed yesterday found that the internal audit activity did not conform with the Standards when carrying out its work. However, the preceding independent external assessment supports the conclusion that the internal audit activity conforms with the Standards.

To reduce costs, the CAE excluded the use of external assessors from the internal audit activity's quality assurance and improvement program for the past seven years. However, the CAE concluded that the internal audit activity conforms with the Standards because all internal assessments over the period have supported this conclusion.

The results of the last external assessment of the internal audit activity, performed a little over five years ago, indicated that the internal audit activity conforms with the Standards. The most recent internal assessment performed within the past year also indicates conformance.

25. Which of the following statements is true regarding the quality assurance and improvement program (QAIP)?

Reporting on the QAIP to the board should occur at least once every five years

The responsibility for the selection of an external assessor rests with the board

The qualifications of the assessors must be communicated to the board

The reporting of outcomes of the QAIP can be delegated to senior audit staff

26. What is the primary reason a chief audit executive should dedicate time and resources to support continuing professional development of internal audit staff?

To ensure that internal audit staff maintains high overall job satisfaction.

To ensure that internal audit staff acquired continuing professional education credits timely.

To ensure that top risks are mitigated to an acceptance level.

To ensure that internal audit staff have he competency to address high-priority risks.

27. Which of the following scenarios demonstrates an impairment to internal audit independence?

The internal auditor s denied access to partner information from management of me area under review

The internal auditor tarts to disclose a potential conflict of interest relationship with management of the area under review

The internal auditor concludes that controls operate effectively, although he did not gather supporting evidence

The internal auditor was assigned to an assurance review of an area for which he previously had responsibilities

28. Which of the following is a responsibility of the internal audit activity as it relates to risk and risk management?

Evaluating and suggesting improvements to the risk management process.

Establishing the organization's risk appetite.

Determining whether the risk attitude is aligned with shareholder interests.

Ensuring an adequate risk management system is in place.

29. The internal audit activity was denied access to expenditure and budget reports because they were considered to be confidential. This situation would result in which of the following limitations of the internal audit activity?

Independence

Integrity

objectivity

Authority

30. An internal audit of an organization's disbursement department revealed that multiple payments were made to legitimate vendors bearing fraudulent banking information belonging lo employees in the department. These vendors were initially set up with accurate banking information but were subsequently modified by disbursement officers with access to the vendor management system.

Which of the following controls would have likely prevented the fraudulent modification of vendors' banking information?

Management periodically reviews and verifies the information in the vendor master Tile.

Management's approval is required for update to vendors' banking information.

Management randomly audits a sample of payments to verify the accuracy of vendors' banking information.

Management's approval is required before payments can be processed.

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31. Operational management in the IT department has developed key performance indicator reports, which are reviewed in detail during monthly staff meetings. This activity is designed to prevent which of the following conditions?

Knowledge/skills gap,

Monitoring gap.

Accountability/reward failure,

Communication failure.

32. Which of the following actions by an internal auditor would be the most relevant to determine the effectiveness of controls?

Participate in a fraud risk-assessment session as an in-house facilitator.

Send regular written updates to senior management on new control-related regulations.

Lead a seminar on internal controls and provide numerous examples to the audience.

Conduct a surprise inventory count at the raw materials warehouse.

33. Which of the following statements is the most appropriate for a chief audit executive to include in the internal audit policy manual in order to promote objectivity?

Internal auditors may conduct a financial effectiveness engagement in a business unit at any point after being transferred from that area.

Internal auditors may conclude that a business unit's current control environment is adequate and effective if the review of the prior year's workpapers and audit report supports that conclusion.

Internal auditors may conduct an engagement in a business unit at any point after providing a training workshop in that area.

Internal auditors should limit the scope of an engagement if they become aware of a potential impairment of their objectivity in order to reduce the potential impact of the impairment on the engagement results.

34. Senior management purchased surveillance cameras and installed them over a door that provides entry to an area where according to a recent internal audit report, hazardous materials exist and there is a high risk of explosion Which type of control was implemented in this situation?

A corrective control

A detective control

A preventive control

A directive control

35. The internal audit activity audited an organization's risk management function multiple

times, and the recommendations that were made remain unaddressed by the head of risk management.

Which of the following would be the next step for the internal audit activity?

The internal audit activity should add value by implementing the recommendations on management's behalf.

The chief audit executive (CAE) must discuss this matter with senior management and the board

The CAE should determine which recommendations to implement based on the severity of the associated risks.

The internal audit activity, led by the CA

should assume responsibility for risk management function.

36. Which of the following statements is true regarding intangible assets?

The amortization period of an intangible asset cannot exceed 20 years.

The cost intangible assets with indefinite lives should be amortized.

Intangible assets are categorized as having either a limited life or an indefinite life.

Companies should record intangible assets at fair market value

37. According to The IIA’s Code of Ethics, which of the following best describes the principle of integrity?

Auditors shall observe the law and make disclosures expected by the law and the profession

Auditors shall disclose all material facts known to them that if not disclosed may distort the reporting of activities under review

Auditors shall engage only in those services for which they have the necessary knowledge skills and experience

Auditors shall be prudent in the use and protection of information acquired in the course of their duties

38. Which of the following is a key determinant used by external auditors to decide whether they can rely on work performed by the internal audit activity?

The auditors' independence.

The auditors' objectivity.

The auditors' integrity.

The auditors' confidentiality.

39. Which of the following best describes the internal audit activity's contribution to the implementation of the risk management framework?

Internal audit identifies key risk areas during assurance reviews and provides audit findings.

Internal audit assists with the prioritization of identified risks.

Internal audit participates in setting the risk appetite.

Internal audit takes part in the design of risk mitigation measures.

40. According to the Standards, which of the following is a requirement for internal audit professional development plans?

Plans must include a path to certification so that each internal auditor has a certification in auditing finances.

Plans must ensure that staff development activities are based primarily on the skills and competencies needed to complete the audit plan.

Plans must include rotating audit areas so that auditors acquire business knowledge to be efficient in performing engagements.

Plans must include rotating auditors out into business units for temporary assignments so they can obtain more business knowledge.

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

Key account reconciliation such as bank reconciliation

Segregation of duties between posting and reviewing journal entnes

A signing authority matrix for spending approvals

The establishment of a finance and audit committee

42. An internal auditor has suspicions that some fictitious vendors have been created in the organization's computer system.

Which of the following would be the best technique to detect this fraud?

Review for duplicate invoice numbers, duplicate dates, and duplicate amounts

Run checks to find matches between vendor and employee addresses

Check for recurring requests for refunds where invoices are paid twice

Review for unexplained increases in inventory

43. Which of the following is the primary benefit of an effective professional development program for internal auditors?

An effective program may enhance internal auditors' business acumen

An effective program may ensure that HA Standards requirements are adhered to during audit engagements

An effective program may ensure internal auditors' effectiveness in setting the organization's nsk management process

An effective program may clarify management's expectations of the auditors and their responsibilities to the organization

44. Which of the following best describes the type of risk that an adequately designed and effectively operating system of internal controls should mitigate?

Net.

Controllable.

inherent,

Residual.

45. In which scenario might it be considered problematic for the chief audit executive (CAE) to provide assurance services over the payroll function?

The CAE previously undertook a consulting assignment in that area to improve processes,

A couple of years ago, the CAE performed accounting functions for the payroll department.

Prior to becoming the CAE, the CAE was the payroll manager.

The assurance review was initiated following issues identified during a consulting assignment requested by management.

46. According to IIA guidance, which of the following is the most accurate statement regarding the internal audit charter?

The IIA's Code of Ethics must exist outside of the charter to maintain independence.

The charter must be approved by both senior management and the board.

The nature of consulting services does not need to be defined in the internal audit charter.

The charter provides a framework for performing a broad range of value-added audit services.

47. Which of the following actions by the internal audit activity requires disclosure to the board of nonconformance with the Standards?

The internal audit activity did not complete an external assessment within the last seven years

The internal audit activity performed an engagement with limited scope due to lack of knowledge

The internal audit activity failed to consider risk when conducting a review of a department

An internal auditor was assigned to an engagement m an area where she previously worked more than 10 years ago

48. A series of incidents over the past year reveals several members of senior management possess a limited understanding of the concept and impact of fraud.

Which of the following would be the most effective way to approach this issue?

The board should ask the internal audit activity to perform additional assurance engagements.

A comprehensive fraud risk assessment and management program should be carried out.

The organization should conduct training sessions on fraud, which should be attended by senior management and staff.

Anti-fraud and whistleblowing policies should be implemented and their importance should be clearly stated.

49. Which of the following written documents typically offers the best evidence that internal auditors exercise due professional care in conformance with the Standards?

Internal audit charter.

Workpaper.

Audit report.

Code of ethics.

50. An internal auditor has completed an assurance engagement.

Which of the following is most likely true regarding the engagement?

During audit planning the auditor provided the client with the scope of the engagement for their agreement

The results of tie engagement were included m a written report mat was issued to the cleint who requested me engagement

During audit planning the auditor determined that the engagement scope would include a review of the security and privacy of payroll records

The client requested the review of a new payroll system in order to improve the security of fie system

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51. An engagement supervisor obtains facilities maintenance reports from a contractor during an audit of third-party services.

Which of the following is the source of authority for the engagement supervisor to make such contact outside the organization?

The policies and procedures of the internal audit activity.

The provisions of the internal audit charter.

The authority of the CE

The IIA's Code of Ethics.

52. A newly hired internal auditor is most likely to need further education in the area of business acumen in which of the following situations?

She was transferred from the managerial accounting department of the same organization.

She was recruited from the internal audit activity of another organization that operates in a different industry.

She was offered a permanent position after she had worked with the organization for two years in a temporary auditor-in-training position.

She previously served on the organization's external audit team and was recruited to the internal audit activity following the current year's financial audit.

53. Which of the following actions would best help the internal audit activity promote continuous improvement in control effectiveness within the organization?

Determining whether management measures and monitors the costs and benefits of controls.

Providing training on controls and ongoing self-monitoring processes.

Developing flowcharts to obtain information about control design adequacy.

Identifying objectives and the risks involved in achieving them.

54. Which of the following fraud schemes is often an off-book fraud*?

Payroll fraud

Disbursement fraud

Corruption

Information misrepresentation

55. Which of the following best demonstrates that the internal audit activity is using due professional care?

The internal audit activity reports directly to the board on the engagements it performs.

Internal auditors undertake the necessary training to complete their audit work.

The completion of engagements is based on the assumption that fraudulent activities may exist.

Internal auditors consider the use of technology-based audit and other data analysts techniques

56. An internal auditor was offered expensive tickets to a sporting event by the manager of an area that she was currently auditing. The auditor politely declined.

Which of the following

fundamental principles of the MA Code of Ethics did she display?

Confidentiality.

Independence.

Competency.

Objectivity

57. The chief audit executive (CAE) decided to conduct a self-assessment with independent validation.

Which of the following is the most likely reason the CAE selected this course of action?

The audit committee requested the self assessment for quality assurance purposes

The staff auditors have the necessary knowledge and experience to conduct the review

The internal audit activity is relatively small in size and is due for an external assessment

The internal audit activity is due for a self-assessment which is specifically required at least once every five years

58. According to IIA guidance, which of the following activities would typically be examined when using the maturity model approach for assessing an organization's risk management program?

Monitor and review.

Performance measurement.

Setting the context.

Communication.

59. Which of the following activities is most likely to require a fraud specialist to supplement the knowledge and skills of the internal audit activity?

Planning an engagement of the area in which fraud is suspected.

Employing audit tests to detect fraud.

Interrogating a suspected fraudster

Completing a process review to improve controls to prevent fraud

60. Which of the following would most likely be classified as a consulting engagement?

Examining the internal control effectiveness of the marketing department

Assessing the adequacy of the IT system's business process design

Facilitating a self assessment of the organizations business risk and control identification

Reviewing the application controls in the human resources system

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61. Which of the following policies promotes internal audit objectivity?

The chief audit executive (CAE) reports functionally to the CEO

The CAE s compensation is approved by the chief financial officer

The CAF's appointment is determined by the CEO

The CAE reports administratively to the chief operating officer

62. An auditor for a large wholesaler is evaluating the controls over the approval and oversight of credit sales.

Which of the following procedures would be a control weakness?

The credit department is responsible for approving shipments to all customers

The finance committee of the board of directors periodically reviews credit standards

Customers who fail to meet credit requirements must pay cash for shipments upon delivery

The sales department is responsible for determining the credit ratings of customers

63. Which of the following techniques should an internal auditor use in order to conduct an effective interview?

Use technical language to establish credibility with the employee being interviewed

Avoid straightforward questions to make the person being interviewed think before answering

Prepare the next question while the interviewee is responding to demonstrate preparedness

Appear confident but not arrogant during the interview to show professionalism

64. What is the primary reason for establishing a continuing professional development program within an organization's internal audit activity?

To ensure all internal audit responsibilities can be met

To ensure all audit staff members are capable of performing a quality self-assessment.

To ensure that each auditor maintains responsibility for his own professional development.

To attract the best and most talented candidates in the profession

65. According to the 11A Code of Ethics, which of the following is required with regard to communicating results?

The internal auditor should present material information to appropriate personnel within the organization without revealing confidential matters that could be detrimental to the organization.

The internal auditor should disclose all material information obtained by the date of the final engagement communication.

The internal auditor should obtain all material information within the established time and budget parameters.

The internal auditor should reveal material facts that could potentially distort the reporting of activities under review.

66. Which of the following could increase risks to the organization’s control environment?

Strong board of directors oversight.

Incentive-based compensation structures.

Lower than average employee turnover.

Implementation of a fraud hotline.

67. Which of the following situations best describes an internal auditor who may have violated the IIA Code of Ethics principle of confidentiality?

The auditor intentionally omitted from his resume that he was fired from his previous job for fraud allegations,

The auditor decided not to notify her supervisor that her brother-in-law was responsible for the project the auditor was expected to evaluate.

The auditor asked the audit client to copy requested files to her personal unencrypted memory stick because it was faster and more convenient.

The auditor was assigned to analyze the organization's incentive program and spent long hours reviewing other employees’ bonuses,

68. Which of the following best demonstrates organizational independence of the internal audit activity?

The chief audit executive reports directly to the board

Internal auditors may not disclose personal data of the audit client

Internal auditors may not accept gifts from management of the area under review

Internal auditors must observe the law and make required disclosures

69. Which of the following is an example of a risk avoidance strategy?

Hedging against exchange rate variations.

Limiting access to an organization’s data center.

Selling a nonstrategic business unit.

Outsourcing a high-risk activity

70. The management team of an agricultural organization has prioritized corporate social responsibility (CSR) initiatives.

Which of the following would be considered a CSR activity?

Offering a one-off donation to an environmental charity for its expansion efforts

Organizing organization volunteers to provide periodic plantation skill sharing to farmers

Providing special year-end monetary bonuses to the organization's employees at all levels

Arranging a free-of-charge picnic for all of the organization's employees and their family members

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71. According to IIA guidance, which of the following statements is true regarding risk management in an organization?

The risk management function has the sole responsibility for identifying and managing risks in all departments

Risk management is a core responsibility of the internal audit activity

The internal audit activity should consider the organization’s maturity, structure, and the competitive environment to establish the organization’s risk appetite

The internal audit activity may use a risk management or control framework to assist in risk identification

72. Upon joining the internal audit activity, each new auditor receives a copy of the audit handbook.

Which of the following handbook policies has the greatest risk of compromising audit objectivity?

Internal auditors should obtain 80 hours of continuing professional education every two years, 20 of which should be audit-related, and the remainder may be operations-related.

Internal auditors should rotate to other areas of the organization for nonaudit assignments to gain an understanding of the organization's operations.

Internal auditors should have direct and unrestricted access to personnel and information throughout the organization and the governing board.

Internal auditors should undergo annual performance appraisals conducted by the chief audit executive, who reports administratively to the chief financial officer.

73. What is the ultimate goal of establishing a robust risk management framework in an organization?

To support the organization's risk culture, involving employees at all levels.

To ensure that the organization attains a better financial position.

To assist the organization in identifying and mitigating key risks.

To facilitate the organization's achievement of business goals and objectives.

74. Which of the following would be addressed in the internal audit charter?

Expertise requirements for internal auditors

Functional and administrative reporting lines for the chief audit executive

Audit engagements to be completed in the next fiscal year

Budget requirements for each engagement

75. An internal auditor performed a consulting engagement last year which included assisting with management's design of controls over the procurement function.

How should the chief audit executive plan an assurance engagement on the adequacy of the internal control system in the procurement function in the current year?

Assign the engagement to another internal auditor on staff

Outsource the engagement to ensure independence

Harness the auditor's knowledge of the procurement function by assigning the engagement to the same internal auditor

Postpone the engagement to the following year to ensure enough time has passed since the controls were designed

76. According to NA guidance, which of the following provides the best evidence of conformance with the Standards with respect to the proficiency required of the internal audit activity?

Discussions with the chief audit executive.

A listing of employee profiles and certifications.

Inquiry of external auditors.

Validation by human resources.

77. Why is it imperative for the chief audit executive to track and develop the educational qualifications of internal audit staff?

To accurately conduct performance appraisals

To ensure that staff complete required continuing professional education credits annually.

To ensure that the resources needed to complete the audit plan are available.

To satisfy the audit committee requirements.

78. According to IIA guidance, which of the following statements is true regarding the internal audit activity’s responsibilities in providing consulting services?

The chief audit executive is responsible for deciding the priority of consulting services in the internal audit plan

The scope of consulting services is determined primarily by the internal auditor with input from management of the area under review

The board defines the internal audit activity’s responsibilities over consulting activities

Adding value to an organization requires the internal audit activity to initiate a consulting engagement

79. Which of the following controls would best mitigate the risk of fraud in the bidding process?

Have a bidding committee open the tender bids.

Restrict the time to submit tender bids.

Keep minutes of pre-bid meetings.

Allow the higher tenders to rebid.

80. According to MA guidance, which of the following statements is true regarding an effective governance process?

It stipulates that risk needs to be considered when making strategic decisions.

It encourages strict segregation of the risk management and internal control processes.

It relies on effective risk management when establishing the organization's risk appetite.

It relies on the board to devise ways to communicate the effectiveness of internal controls.

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81. Which of the following best describes why a chief audit executive might obtain the services of a fraud specialist to assist in a major fraud investigation'?

Fraud specialists are better at using computer-assisted audit techniques

Fraud specialists are better equipped to act as an expert witness in court

Fraud specialists are better able to properly apply due professional care

Fraud specialists are better at using crime scene investigation techniques

82. Which of the following statements is true regarding management's use of judgement to design, implement, and conduct internal control?

The use of judgment enhances management's ability to make better decisions about internal control, but cannot guarantee perfect outcomes.

Introducing judgment generally diminishes management's ability to make good decisions about internal control.

It is inappropriate for management to exercise judgement in areas such as specifying and using suitable accounting principles.

It is inappropriate for management to exercise judgement in assessing whether components are present, functioning, and operating together

83. Which of the following would be the most effective fraud prevention control?

Email alert sent to management for checks issued over $100,000.

Installation of a video surveillance system in a warehouse prone to inventory loss.

New hire training to explain fraud and employee misconduct.

Daily report that identifies unsuccessful system log-in attempts

84. Following a quality assurance review of a small internal audit activity, the external reviewer and the chief audit executive (CAE) cannot agree on the importance of several deficiencies noted during the review.

Which of the following would be the most appropriate next step for the reviewer to take?

Remove the areas of disagreement from the scope of the engagement and seek informal compromises with the CA

Issue the report to senior management, noting the deficiencies for immediate resolution.

Issue the report, noting the deficiencies with comments that address the areas of disagreement.

Request arbitration from the audit committee to resolve discrepancies prior to issuing the final report

85. Which of the following describes a primary responsibility for the internal audit activity in helping management maintain effective controls?

Promoting continuous evaluation

Promoting continuous monitoring

Promoting continuous improvement

Promoting continuous reporting

86. In which of the following scenarios would the chief audit executive (CAE) be required to decline the assignment?

The CAE would need to procure external services to deliver the internal audit assurance program.

There is no expertise within the internal audit team for detecting and investigating fraud.

There is no expertise within the internal audit team for auditing an IT engagement.

There is no available expertise on the internal audit team to perform a consulting engagement

87. Which of the following best demonstrates conformance with IIA standards related to continuing professional development?

Retaining evidence of training in the form of continuing education credits

Seeking guidance regarding internal audit best practices from The IIA

Retaining supervisory reviews conducted on the basis of the development plan

Giving consideration to certain areas of specialization as part of development planning

88. A fraud investigation was completed by management, and a proven fraud was communicated to relevant authorities. According to IIA guidance, which of the following roles would be most appropriate for the internal audit activity to undertake after the investigation?

Plan employee sessions and team building strategies for the organization to improve awareness of fraud among employees

Review the investigation and implement any improvements to the process.

Conduct lessons learned sessions to ascertain how the fraud occurred and which controls failed.

Determine why the fraud was not detected earlier and design controls to strengthen early detection.

89. Which of the following actions should the audit committee take to promote organizational independence for the internal audit activity?

Delegate final approval of the risk-based internal audit plan to the chief audit executive (CAE).

Approve the annual budget and resource plan for the internal audit activity.

Assist the CAE with hiring objective and competent internal audit staff.

Encourage the CAE to communicate and coordinate with the external auditor.

90. According to The IIA’s Code of Ethics, which of the following statements is true?

When an internal auditor releases required information to a regulator, resulting in a significant loss through fines and penalties for the organization, he fails to add value.

When an internal auditor limits the scope of the audit engagement after learning that management is hiding relevant information, he demonstrates integrity.

When an internal auditor disagrees with the treatment received by workers in the organization’s foreign subsidiary and alters the audit program to highlight the issue, the fails to demonstrate objectivity.

When an internal auditor continues with an audit engagement, despite the audit client’s claims that the work performed is unnecessary and redundant, he fails to demonstrate competency.

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91. Which of the following statements is true regarding control activities?

Control activities are carried out by first-line and second-line functions to mitigate risks.

Control activities are implemented by internal auditors to mitigate risks to an acceptable level.

Control activities provide the foundation for the organization to establish its risk appetite.

Control activities are a precondition to setting risk tolerance levels.

92. Which of the following statements best describes internal auditors' role in fraud detection?

Internal auditors' roles are similar to those performed by loss prevention managers or fraud investigators.

Internal auditors' demonstration of adequate professional skepticism during an audit engagement is of paramount importance.

Internal auditors should consider fraud risks in every assignment and demonstrate due care by detecting fraud instances.

Internal auditors should possess a fraud-related body of knowledge, enabling them to carry out preventative and detective measures.

93. Which competency is required of all staff internal auditors prior to the commencement of an IT audit?

The ability to assess IT governance.

The ability to provide an explanation on the risk profile of the organization to the board and senior management.

The ability to ensure that proposals for improvements to internal controls are balanced with organizational objectives and capabilities.

The ability to assess the potential for fraud risk and identifying common types of fraud associated with the engagement.

94. Which of the following scenarios best illustrates the Fraud Triangle component known as "perceived opportunity"?

Substantial bonuses are awarded if financial targets are met.

Duties are not properly segregated.

Employees may perceive favoritism and feel overlooked and resentful.

Bonuses may not be paid this year.

95. The board of directors of a global organization has found an increased number of reported cases of unethical practices since last year. To assist the board in gaining a better understanding of the degree of ethics awareness within the organization, which of the following actions should be undertaken?

Request the internal audit activity to perform an ethics-related assurance engagement.

Offer in-house ethics-related training seminars for employees to attend.

Reaffirm the importance of the organization's code of ethics to all employees.

Conduct an organizationwide employee survey on ethical practices

96. Which of the following statements is true regarding an organization's code of ethics?

It should be written with primary consideration given to using a rule-based approach.

It should be of two variations: one applicable internally and one applicable for third parties.

Its operational effectiveness cannot be tested using traditional audit and rating systems such as maturity models.

It should require an annual attestation of compliance with the code of conduct by all employees.

97. The chief audit executive of a large national retailer is reviewing the purpose and objectives of the organization's internal audit activity

Which of the following objectives is best aligned with The IIA's Mission of Internal Audit?

To implement a quality assurance and improvement program

To assess the effectiveness of internal controls over organizational assets

To ensure internal auditors possess the competencies needed to perform their responsibilities

To operate within the budget established by the board of directors

98. Upon completion of an external assessment as part of the quality assurance and improvement program (QAIP), the chief audit executive (CAE) reported the results to senior management and the board The CAE included the following elements in the report

- Qualifications and independence of me external assessment team

- Conclusions of assessors

- Corrective action plans

How should the CAE improve the aforementioned approach to reporting the resets of QAIP?

Senior management should be excluded from the reporting as the QAiP results must be communicated to re board only

The report can be streamlined by removing unnecessary information such as the qualifications and me independence of external assessors

The results must be snared with the external a auditors as well, so they can determine the extent to which they can rely on me work of the internal audit activity

The report should indicate that the external assessment must be performed at least once every five years

99. According to MA guidance, which of the following gives the internal audit activity the authority to request supporting documentation for the invoices of a third-party service provider?

The internal audit policy manual.

The internal audit charter.

The board of directors.

The quality assurance and improvement program.

100. Which of the following should play a leading role in overseeing the ethical atmosphere of an organization?

Internal audit activity

Operating management

Senior management

Board of directors

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

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

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

The CAE reports functionally to the CE

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

102. Which of the following would be an important aspect of an internal auditor's role in fraud management?

Utilizing analytical techniques to actively discover instances of potential fraud

Conducting fraud based audits to ensure that fraud will be detected during engagements

Implementing fraud prevention controls to minimize and mitigate the risk of fraud

Reporting instances of fraud discovered during engagements to regulatory bodies

103. Which of the following statements is most likely to be true regarding a consulting engagement involving an organization's new payroll system?

The internal auditor and engagement client established an understanding that the scope would include the new payroll system project.

The payroll system engagement was scheduled as a result of internal audit's risk-based annual planning process.

The internal auditor concluded that the engagement objectives would include assessing the effectiveness of the payroll process controls.

The internal auditor acknowledged the engagement client’s satisfactory performance in the final engagement results that were communicated to senior management and the board.

104. According to IIA guidance, which of the following statements is true regarding proficiency?

The globally accepted Certified Internal Auditor designation is mandatory at chief audit executive levels.

Internal auditors are encouraged to obtain appropriate professional designations.

Specialty designations are required for those who perform specialized audit and consulting work.

Studies for professional designations are the preferred source of continuing professional education

105. Which of the following is an example of a directive control?

Segregation of duties.

Exception reports.

Training programs.

Supervisory review.

106. Does the instructor provide feedback on the thought process to reach an ethical resolution?

1 and 2.

1 and 4.

2 and 3.

3 and 4.

107. Which of the following activities would an internal auditor perform as a consulting engagement for an organization?

Advising new internal auditors working for the organization on how to develop strategies on planning audits for the upcoming fiscal year

Assessing whether the organization's corporate social responsibility program is meeting its yearly goals to reduce carbon emissions.

Briefing the organization's department managers on how to implement risk management processes into their daily operations.

Communicating with senior management to better understand how new purchasing controls will minimize payment processing time.

108. According to IIA guidance, which of the following is a required aspect of an internal audit charter?

Management approval

Independent review

Reporting relationships

Quarterly assessment

109. Due to unfavorable economic conditions management decided to postpone new investments for the next year.

Which of the following best describes the risk management

strategy used to address this situation?

Risk mitigation

Risk avoidance

Risk reduction

Risk transfer

110. Which of the following is a primary responsibility of senior management with respect to ethical violations?

Senior management provides oversight for the organization's ethical climate.

Senior management promotes an ethical culture in the organization.

Senior management assesses the effectiveness of the organization’s ethical programs.

Senior management reviews major ethical policies in the organization for compliance

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111. Which principle of the HA Code of Ethics focuses on continuing education and professional development?

Due professional care

Professionalism

Proficiency

Competency

112. Which of the following would provide the best support for internal auditors to meet their continuing professional development requirements?

Access to online internal audit and business skills courses.

Records of self-assessment reports completed by the internal audit staff.

Cosourcing arrangements with external providers on specific engagements.

Performance reviews comparing internal auditors' achievements against specified goals.

113. Which of the following fraud prevention measures is most likely to trigger undesired adverse behavior if improperly designed?

Disclosure of outside business activities

Ethics training programs

Compensation programs

Exit interviews

114. Which of the following activities best demonstrates an internal auditor’s commitment to developing professional competencies?

Requesting to be part of all engagements on the annual audit plan.

Attending a series of locally offered training courses.

Completing a skills assessment and development plan for targeted training needs,

Attending a webinar on how to use data analytics

115. According to MA guidance, which of the following is the strongest indicator of deficiencies in the risk management process?

The periodic evaluation of risk ratings is primarily dependent on subjective assessments.

Separate evaluations of the risk management process were conducted, but the results were never integrated.

Management's primary objective is minimizing changes to the structure and operation of the risk management process.

Many aspects of the related enterprise risk management program are informal and undocumented.

116. Which of the following would be considered a violation of The HAfs mandatory guidance on

independence?

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

The board seeks senior management's recommendation before approving the annual salary adjustment of the CA

The CAE confirms to the board, at least once every five years, the organizational independence of the internal audit activity,

The CAE updates the internal audit charter and presents it to the board for approval periodically, not on a specific timeline

117. An employee accepts cash payments from customers and does not record the sale. This is an example of which of the following types of fraud?

Asset misappropriation.

Skimming

Corruption.

Lapping.

118. Which of the following factors is most important for internal auditors to consider when prioritizing fraud risks?

The organization’s code of conduct.

The organization’s competition.

The organization’s code of ethics.

The organization’s culture

119. Which of the following is an example of the chief audit executive (CAE) demonstrating due professional care?

The CAE relies on CAEs in other organizations to understand how due professional care should be executed in her internal audit activity

The CAE meets with the board of directors on a quarterly basis to provide a status update.

The CAE assesses the audit staff's knowledge and skills annually to determine whether additional resources are needed to fulfill the internal audit plan.

The CAE provides absolute assurance to line management during each eternal audit engagement

120. Which of the following statements best represents the duo professional care that is required of internal auditor’s?

Internal auditors should perform assurance procedures to ensure that all significant risks are identified.

Internal auditor should not perform consulting engagements for operations for which they had previous responsibilities.

Internal auditors should consider the cost of assurance in relation to the potential benefits.

Internal auditors should device internal audit programs to confirm that the results are accurate.

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121. Which of the following is true with regard to an organization's risk management practices?

Risks represent a single point estimate

Each organization faces the same types of risk.

Risks may relate to failing to achieve positive outcomes.

Mitigated risks are no longer considered to be inherent.

122. An investment advisory firm purchased professional liability insurance to offer protection from lawsuits brought by customers claiming they received poor or erroneous advice.

Which of the following best describes this risk management technique?

Mitigation.

Acceptance

Transfer.

Avoidance

123. Which of the following parties would be responsible for ongoing monitoring of the organization's corporate social responsibility activities to reduce its carbon footprint?

Chief audit executive

Facility operation manager

Public relations manager

Regulatory agency

124. An internal audit activity maintains a quality assurance and improvement program that includes annual self-assessments. The internal audit activity includes in each engagement report a clause that the engagement is conducted in conformance with the International! Standards for the Professional Practice of Internal Auditing (Standards).

Which of the following justifies inclusion of this clause in the reports?

Internal audit activity policies and engagement records provide relevant, sufficient, and competent evidence that the statement is correct.

The audit committee has reviewed the annual self-assessment results and approved the use of the clause.

The self-assessment results were validated by a qualified external review team three years prior.

The internal audit charter, approved by the audit committee, requires conformance with the Standards

125. According to IIA guidance, the nature and scope of assurance and consulting services to be offered must be clearly delineated in which of the following internal audit documents?

The internal audit policies and procedures handbook.

The internal audit charter.

The internal audit mission statement.

Each internal audit engagement letter.

126. An organization is implementing a new cybersecurity policy and has established a committee to ensure stakeholder alignment across the organization's infrastructure, network, and security teams. The head of the committee has asked the chief audit executive if the internal audit activity could play a role in these efforts. According to HA

guidance, which of the following is the most appropriate response?

It is not appropriate for the internal audit activity to play a role because its independence must be protected.

The internal audit activity should not participate because there are no IT auditors on staff.

The internal audit activity is knowledgeable about risk and therefore should prioritize the organization's responses and control activities for the committee.

The internal audit activity may assist the committee and consult with management on the organization's responses and control activities.

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

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

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

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

When it is standardized for the whole entire staff.

128. The organization's chief audit executive (CAE) is planning an immediate assurance engagement following several product recalls. However, the internal audit staff does not have the required Knowledge and experience to adequately assess all the relevant processes and procedures. According to 11A guidance, which of the following actions should the CAE take under these circumstances?

Use the current available resources to conduct the review and exclude those procedures that can't currently be performed.

Implement an accelerated training plan to provide the audit staff with the necessary skills and knowledge to conduct the engagement.

Encourage management to accept the assessed risk until the internal audit activity is able to adequately review the area.

Obtain assistance for the audit team from other internal assurance providers who possess the requisite expertise in the area.

129. Which of the following scenarios would most significantly restrict the areas where internal audit could perform assurance services?

Regulators mandate specific audit engagements to be included in the audit plan.

The internal audit activity reports functionally to the chief financial officer

The internal audit activity reports administratively to the CEO and functionally to the audit committee.

The internal audit activity reports administratively to the chief financial officer.

130. During an assurance engagement an internal auditor discovered that risk limits risk limit were set for a new market expansion project Management of the area under review was eager to comply and submitted a potential risk limit value for the auditor's review and approval.

Which of the following would be an appropriate course of action for the auditor to take?

Review the submission and if no further remarks exist approve the risk limits

Provide advice if needed and ask management of the area under review to forward to senior management and the board for approval

Develop risk limit calculation criteria and ask management of the area under review to resubmit the values.

Avoid providing any advice or review until the audit report is issued

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131. According to IIA guidance, which of the following statements is true regarding reporting the results of the quality assurance and improvement program?

Results of internal assessments need to be reported to the board at least once every five years.

The external assessor must present the findings from the external assessment to senior management and the board upon completion.

Deficiencies within the internal audit activity must be reported to the board as soon as they are noted.

Results of ongoing monitoring of the internal audit activity's performance must be reported to senior management and the board at least annually

132. Which of the following best describes a consulting engagement rather an assurance engagement?

Bank internal auditors review an activity checklist to determine that the loan officer followed proper procedures.

The chief financial officer asks for the internal auditor's opinion regarding whether the new accounting pronouncements were properly and comprehensively adopted

An internal auditor is assigned to assess whether a proposed new initiative to convert a customer service system would be cost effective.

Senior management asks the internal audit activity to review compliance with customer data security regulations

133. During an assurance engagement internal auditors interview operational management to gather and evaluate information.

Which approach is most important for internal auditors to be able to listen effectively to interviewees in the given situation?

Make an audio recording of the interview

Interrupt with questions during unclear statements

Express interest by asking follow-up questions

Avoid periods of silence

134. Six months after an employee was transferred to the internal audit activity his former operating manager requested that he return to assist a project team with the evaluation of a new pricing module for the organization’s online ordering system According to IIA guidance which of the following statements is true?

The auditor cannot be assigned to this project, as it has been fewer than 12 months since he was transferred from that department.

Another internal auditor should be appointed to the engagement to preserve the independence of the internal audit activity

The auditor cannot participate in the assignment, as providing an opinion would impair his objectivity

The auditor may participate on the project, as the nature of the assignment is consulting

135. According to MA guidance, which of the following is an appropriate role for the internal

audit activity?

Coaching management in responding to risks.

Implementing risk responses on management's behalf.

Imposing risk management processes.

Setting the risk appetite.

136. Which of the following is a greater consideration for internal auditors when they are performing a consulting engagement than when they are performing an assurance engagement'?

The relative complexity of the engagement

The cost of the engagement relative to its benefits

The extent of work needed to achieve the engagement's objective

The needs and expectations of the engagement client

137. Wi ch of the following circumstances would most likely be considered a potential red flag for fraud by the internal audit activity?

The monthly payroll reports are not vetted to ensure terminated employees have been removed from the payroll system

The volume of nonroutine journal entries has steadily increased over time.

The database of approved suppliers has not been reviewed the last year

The recent employee survey indicates that some employees remain unaware of the organization’s whistieblower hotline.

138. Which of the following is the best reason why the engagement supervisor should take care in explaining to local management the criteria that will be used to measure the effectiveness of the control environment?

The assessment will cover soft controls and company values.

The assessment will focus on the policy for a particular process.

The assessment will lack a defined scope

The assessment will probably uncover fraud risks.

139. Which of the following is an example of a management control technique?

A budget.

A risk assessment.

The board of directors.

The control environment

140. During an audit of company expenses, the internal auditor performed a test using data analytics and identified a violation of the company's expenses policy. The auditor who discovered the issue considered it a potential fraudulent transaction and informed the chief financial officer (CFO). The CFO dismissed the concern because he did not understand the data analytics test that was performed and the transaction was of a low value. Given this situation, which skills or competencies should this internal auditor seek to improve?

Skills in evaluating the risk of fraud.

Knowledge of key IT risks and controls

Soft skills such as communication and negotiation.

Knowledge and understanding of the company's expenses policy

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141. Which of the following best describes a responsibility of the board of directors with regard to risk management throughout the organization?

Monitor the organization's overall risk activities in relation to its risk appetite and other risk criteria.

Guide the integration of risk management with other business planning and management activities.

Review the portfolio of risk of the organization in relation to its risk appetite.

Assume responsibility for the effectiveness and success of the risk management framework

142. Which of the following process weaknesses is most likely to cause an internal auditor the most concern about fraud risk?

Final employee payroll list is belatedly sent to the bank for payment processing.

Employee salary is calculated by the payroll system without further verification.

Employee personal records in the permanent file are not updated in a timely manner

Employee personal information in the payroll system could be updated without approval.

143. As part of a fraud investigation by regulators, a court order was issued to a bank. The court order requested the chief audit executive (CAE) to provide access to a number of audit reports and workpapers, some of which included customers' confidential information such as transaction activity and other personal details.

What is the appropriate response by the CAE?

Reject the court order, citing a potential breach of customers' confidentiality agreement

Consult with legal counsel to determine what information to provide.

Respond promptly and provide all that was requested by the court order.

Seek permission from customers prior to sharing their information.

144. Who is responsible for ensuring internal auditors’ continuing professional development?

Individual internal auditors.

Chief audit executive.

The board.

Engagement supervisors.

145. Which of the following statements best illustrates why internal auditors assess soft controls?

Assessing soft controls are an effective method of assessing risk related to personnel.

Assessing soft controls, as opposed to hard controls, makes it easier to evaluate operating effectiveness.

Assessing soft controls can help internal auditors in undertaking root-cause analysis.

Assessing soft controls provides more objective information than assessing hard controls.

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

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

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

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

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

147. Which of the following scenarios best illustrates due professional care?

An internal auditor who previously worked in the payroll department within the last year was intentionally excluded by the chief audit executive from the audit team assigned to a payroll audit

While performing a payroll audit an auditor became skeptical about significant payments made to a manager. The auditor sought to determine whether these payments were reasonable through discussion with a manager in a different department in the organization

The head of the payroll department being audited is a business partner of the engagement supervisor During the audit the engagement supervisor sought to maintain his objectivity by not participating in fieldwork

An auditor assigned to a payroll audit was unable to reperform some complex payroll computations for a small number of employees The sum of these payments was below the materiality thresholds provided so the auditor did not perform further tests

148. Internal audit is performing an engagement to determine whether there were indications of questionable bidding on a city s infrastructure project. As part of the engagement the internal audit activity became aware that certain firms tend to receive the contracts for large city projects.

How should the internal audit activity proceed with the engagement and identify questionable bidding practices?

Obtain the city s vendor listing to determine whether there was an adequate number of firms available to solicit bids for protects

Obtain at of the city s financial records to identify any firms that received payments for contracted goods and services.

Obtain the city's contracting files to determine whether the city demonstrated efforts to solicit bids from various interested firms.

Obtain the city’s official public meeting minutes to determine whether there were concerns about the contracting practices

149. Which type of engagement requires that the client agrees with the techniques used by the internal audit activity?

A performance audit.

A sensitive fraud investigation.

A compliance audit

A consulting service.

150. During engagement planning, an internal auditor determines that the cost of a certain test outweighs the benefit that can be expected from the results. He determines that this test can be removed from the audit work program.

Which of the following did the internal auditor best demonstrate?

Due professional care

Individual objectivity

Proficiency

Internal assessment

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151. At a construction company, supervisors are entitled to bonus payments if there are no safety rule violations on their teams. There are several channels available for workers to report accidents and violations, and all reported violations are investigated. Bonus payment calculations are approved by managers and the head of safety.

Which of the controls best addresses the risk that supervisors will conceal accidents on their teams in order to receive the bonus?

The investigation of all reported violations

The authorization process for bonus calculations

The variety of reporting channels

The presence of safety rules

152. A newly hired internal auditor is performing an engagement that requires significant IT expertise that he does not possess. If the auditor does not alert the chief audit executive about his lack of expertise and decides to perform the engagement anyhow, which principle of the IIA's Code of Ethics would he violate?

Due professional care.

Competency.

Effective communication

Professionalism

153. Which of the following scenarios best illustrates the concept of due professional care?

After establishing engagement objectives and reviewing a process, the internal auditor assured process owners that all significant risk events were identified and tested using a systematic, disciplined approach.

After conducting an audit based upon a predefined scope and objective, the internal auditor guaranteed management that the system of internal controls in an audited area operates effectively.

As head of the internal audit activity, the chief audit executive reported functionally to the organization's board and administratively to senior management.

As head of the internal audit activity, the chief audit executive ensures that engagement supervisors conduct post-engagement staff meetings.

154. Upon completion of an external quality assessment, which of the following would the chief audit executive be required to report to the board?

The total time spent to accomplish the external assessment

The detailed evaluation results of the external assessment

The competency and independence of the external assessment team

The timetable and schedule of the next external assessment

155. Which of the following can be used to minimize employees’ resentment of controls?

Making sure employees are exempt from participating in control creation

Implementing controls without lengthy explanations of their purpose

Developing general constricting controls rather than detailed ones

Not using controls to achieve goals

156. A newly appointed chief audit executive (CAE) is tasked with creating a new internal audit activity within the organization.

Which of the following would the CAE need to include in the new internal audit charter?

The requirement to provide an annual cost analysis that justifies having an internal audit activity

The specific engagements that the internal audit activity will perform for the organization

The board s oversight role and responsibilities pertaining to the internal audit activity

The relevant regulations that will guide the internal audit activity's regulatory compliance assessments

157. Which type(s) of assessments in an internal audit activity’s quality assurance and improvement program requires ongoing monitoring to evaluate internal audit activity's efficiency and effectiveness?

Neither internal nor external assessment

internal assessment

Both internal and external assessment

External assessment

158. Which of the following is a strategic risk that internal auditors should consider when performing a third-party risk management engagement?

Physical security

Loss of intellectual property

Cost overruns

Conflict of interest

159. Which of the following drivers of fraud is directly controllable by an organization?

Pressure

Rationalization

Opportunity

Incentive

160. Applying ISO 31000, which of the following is part of the external context for risk management?

Risk treatment method based on risk evaluation.

Organizational culture, objectives, and processes.

The regulatory and competitive environment

The method of determining the risk level.

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161. The internal audit activity is responsible for which of the following actions related to an organization’s internal controls?

Mitigating risks affecting achievement of organizational objectives.

Enabling opportunities affecting achievement of organizational objectives.

Analyzing and advising regarding costs versus benefits of control activities,

Attesting to fairness of financial statements.

162. Which of the following is an example of risk monitoring to ensure a system is performing as intended?

Checking the progress of risk treatment plans

Considering the consequence and likelihood of risks

Documenting the risks and their areas of impact

Communicating to management about risks

163. Which of the following best describes the type of organizational culture known as adaptability culture'?

A results-oriented culture that values competitiveness and personal initiative

A culture that emerges in quick-response and high-risk decision-making environments

A culture that is characterized by low involvement with environmental and health issues

A culture that places high value on participation and meeting the needs of employees.

164. Which of the following is the most appropriate way to ensure that a newly formed internal audit activity remains free from undue influence by management?

Appoint the chief audit executive as a member of the board.

Adopt written policies and procedures for the internal audit activity, approved by the board.

Ensure the chief audit executive reports administratively to the audit committee.

Establish the internal audit activity’s position within the organization in an audit charter.

165. A chief audit executive (CAE) was asked by senior management to establish and manage a risk management function. A new chief risk officer was hired a year later to assume these responsibilities. As this function was included in the current annual audit plan, the CAE engaged an external resource for a risk management engagement.

Which of the following potential threats to objectivity was the CAE likely addressing?

Self-review threat.

Advocacy threat.

Familiarity threat.

Personal relationship threat.

166. Which of the following procedures will best help an internal auditor assess operating effectiveness of fraud prevention and detection controls?

Benchmarking best practices

Testing,

Mapping,

Interviewing

167. A large commercial bank was fined by regulators for fraudulent practices when employees, over a period of time, opened thousands of new accounts for existing clients without the clients' consent. It was later found that employees were given unrealistic new account targets and were aggressively monitored by management on a daily basis.

Which of the following controls would have most likely reduced the likelihood of the fraudulent practice from occurring?

An evaluation of the current performance and compensation program.

The performance of background investigations on all existing employees.

The availability of fraud training to all employees.

The availability of an employee whistleblower hotline

168. A technology company recently hired an entry-level internal auditor. To achieve conformance with the Standards, which of the following must the newly hired internal auditor possess?

An understanding of fraud and fraud risk.

IT audit expertise.

Industry-specific knowledge

At least one audit-related certification

169. Identify and mitigate risks to help meet the CSR program objectives.

1,2, and 3.

1,2, and 4.

1, 3, and 4.

2, 3, and 4

170. Which of the following best demonstrates the application of due professional care?

An engagement supervisor requests that the employment of a process owner be terminated due to a significant control failure.

An audit lead establishes internal audit manuals to guide the internal audit activity on now to undertake audit engagements.

An audit manager provides a guarantee to senior management that internal controls relating to an audited process operate effectively.

An organization's internal audit activity operates under a direct reporting structure to tie audit committee of the board

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171. According to IIA guidance, which of the following best describes expense reimbursement fraud?

Theft of cash after it is recorded in the books

Theft of cash before it is recorded in the books

Theft of assets through fictitious or inflated invoices

Theft of assets through false mileage travel logs and meal charges

172. In which of the following ways can a chief audit executive demonstrate to the board that the internal audit activity collectively possesses all of the skills needed to complete its annual goals?

Involve board members in hiring activities and request advice.

Require all internal audit staff to complete the same training course on a general audit subject,

Require senior auditors to obtain a professional certification.

Provide a competency assessment of the internal audit staff.

173. 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?

Accepting the assignment is a violation of internal audit independence

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

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

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

174. Which of the following would be considered an impairment to an internal auditor's objectivity when performing a review of the organization's procurement function'?

The internal auditor worked on the implementation of the accounting system within the organization before joining the internal audit activity last year

The internal auditor is part of a multidisciplinary team tasked to assist with a new project implementation checklist within the organization

The internal auditor worked as a sourcing specialist before joining the internal audit activity last year

The internal auditor participates in a cross-departmental team for information and data security within the organization

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