IIA Certified Internal IIA-CIA-PART1 Questions & Answers

• Question 531:

  If an engagement client's operating standards are vague and thus subject to interpretation, the auditor should:

  A. Seek agreement with the client as to the standards to be used to measure operating performance.

  B. Determine best practices in the area and use them as the standard.

  C. Interpret the standards in their strictest sense because standards are otherwise only minimum measures of acceptance.

  D. Omit any comments on standards and the client's performance in relationship to those standards, because such an analysis would be meaningless.

  Correct Answer: A

• Question 532:

  An employee who recently transferred into the internal audit activity has been assigned to audit the accounts payable system.

  Which function, if previously performed by the auditor, would represent a conflict of interest?

  A. Monitoring the allowance for doubtful accounts.

  B. Writing procedures for the handling of duplicate payments.

  C. Signing timekeeping cards for subordinates.

  D. Reviewing shipping documents for accuracy.

  Correct Answer: B

• Question 533:

  An audit to test the system of controls over the purchase, distribution, and use of radioactive material is being conducted at a company's plants. The process is well documented, and employees in the safety department are very familiar with the department's procedures. Since the purchasing and facilities departments are involved in the process, the auditor is considering reviewing their radioactive material-handling procedures as well. The auditor should:

  A. Have confidence in the rigorous and detailed safety department procedures, since that department has the main responsibility for radiation safety, and should not use audit time to review other departments.

  B. Adjust the engagement schedule and budget, if needed, and interview the appropriate individuals in the purchasing and facilities departments to ascertain whether additional controls exist that complement those identified within the safety department.

  C. Test the controls identified within the safety department; if results are unfavorable, the auditor should consider whether to involve the other departments.

  D. Defer questions regarding purchasing, facilities, and other departments until audit projects can be scheduled for those departments.

  Correct Answer: B

• Question 534:

  The chief audit executive should periodically report the internal audit activity's purpose, authority, responsibility, and performance, as well as significant risk exposures and control issues, to which of the following?

  I. Board of directors.

  II. Senior management.

  III. Shareholders.

  IV.

  External auditors.

  A.

  II only

  B.

  I and II only

  C.

  I, II, and III only

  D.

  I, III, and IV only

  Correct Answer: B

• Question 535:

  Which of the following is an appropriate consideration by the auditor when preparing an engagement program for a human resource audit?

  A. State the work steps in the form of questions.

  B. Use standard audit program for HR from previous years.

  C. Include in the audit program certain audit tests requested by audit client.

  D. Defer preparation of the audit program after the field work.

  Correct Answer: C

• Question 536:

  Which of the following would be a violation of the IIA Code of Ethics?

  A. Reporting information that could be damaging to the organization, at the request of a court of law.

  B. Including an issue in the final audit report after management has resolved the issue.

  C. Participating in an audit engagement for which the auditor does not have the necessary experience or training.

  D. Accepting a gift that is a commercial advertisement available to the public.

  Correct Answer: C

• Question 537:

  During a payroll audit of a large organization, an auditor noted that the assistant personnel director is responsible for many aspects of the computerized payroll system, including adding new employees in the system; entering direct-deposit information for employees; approving and entering all payroll changes; and providing training for system users. After discussions with the director of personnel, the auditor concluded that the director was not comfortable dealing with information technology issues and felt obliged to support all actions taken by the assistant director. The auditor should:

  A. Continue to follow the engagement program because the engagement scope and objectives have already been discussed with management.

  B. Review the engagement program to ensure testing of direct deposits to employee bank accounts is adequately covered.

  C. Recommend to the chief audit executive that a fraud investigation be started.

  D. Test a sample of payroll changes to ensure that they were approved by the assistant director before being processed.

  Correct Answer: B

• Question 538:

  An organization's accounts payable function improved its internal controls significantly after it received an unsatisfactory audit report.

  When planning a follow-up audit of the function, what level of detection risk should be expected if the audit and sampling procedures used are unchanged from the prior audit?

  A. Detection risk is lower because control risk is lower.

  B. Detection risk is lower because control risk is higher.

  C. Detection risk is higher because control risk is lower.

  D. Detection risk is unchanged although control risk is lower.

  Correct Answer: D

• Question 539:

  Which of the following risk assessment tools would best facilitate the matching of controls to risks?

  A. Control matrix.

  B. Internal control questionnaire.

  C. Control flowchart.

  D. Program evaluation and review technique (PERT) analysis.

  Correct Answer: A

• Question 540:

  Which of the following is an example of sharing risk?

  A. An organization redesigned a business process to change the risk pattern.

  B. An organization outsourced a portion of its services to a third-party service provider.

  C. An organization sold an unprofitable business unit to its competitor.

  D. In order to spread total risk, an organization used multiple vendors for critical materials.

  Correct Answer: B