IIA Certified Internal IIA-CIA-PART1 Questions & Answers

• Question 51:

  According to IIA guidance, which of the following is not a responsibility of the chief audit executive pertaining to documenting information to support internal audit engagement results and conclusions?

  A. Rating each engagement record to assess its relevance and accessibility for the organization's board.

  B. Controlling access to engagement records, including access by senior management.

  C. Developing retention requirements for engagement records that are consistent with organizational guidelines.

  D. Forming policies governing the custody and retention of consulting engagement records before their release to other parties.

  Correct Answer: A

• Question 52:

  The chief audit executive (CAE) of a small internal audit activity (IAA) performs all high-risk engagements on the annual audit plan to make use of his knowledge and experience and to maximize the efficient use of audit resources. Which of the following statements is most relevant regarding this practice?

  A. The CAE's work may be reviewed by any other experienced staff member within the IAA.

  B. The CAE's work should be reviewed by an individual with the appropriate background and knowledge.

  C. The CAE may self-review his work, provided he discloses this practice in the final report.

  D. The CAE should avoid performing engagements to ensure he is able to review all audit work objectively.

  Correct Answer: B

• Question 53:

  Which of the following factors should be considered when determining the appropriate combination of manual techniques and computer-assisted audit techniques (CAATs) to be used during an audit?

  1.

  Acceptance of CAATs findings by entity management.

  2.

  Computer knowledge and expertise of the auditor.

  3.

  Time constraints.

  4.

  Level of audit risk.

  A. 1 and 4

  B. 2 and 3 only

  C. 1, 2, and 3

  D. 2, 3, and 4

  Correct Answer: D

• Question 54:

  An internal auditor uses a predefined macro provided in a popular spreadsheet application to verify the present value of the organization's investments. Which of the following is the most appropriate course of action regarding the auditor's use of this functionality?

  A. The auditor should accept the calculations generated by the function, as any further work or documentation would be inefficient.

  B. The auditor should perform a manual recalculation of several results to validate and document the results.

  C. The auditor should review the programming of the macro before its use to ensure that it is appropriate for the required calculations.

  D. The auditor should tabulate the results in the spreadsheet to ensure the macro has generated the correct results for all calculations.

  Correct Answer: B

• Question 55:

  While performing an accounts payable engagement, a senior auditor wants to conduct several tests of controls for travel expenses. Which of the following actions are most appropriate for the senior auditor to undertake?

  1.

  Ensure all tests use a random sampling technique.

  2.

  Consider a judgmental approach for the sample size.

  3.

  Assess testing errors through root cause analysis.

  4.

  Ensure that the entire data set is tested.

  A. 1 and 2.

  B. 1 and 3.

  C. 2 and 3.

  D. 2 and 4.

  Correct Answer: C

• Question 56:

  Which of the following techniques would provide the most compelling evidence that a safety hazard exists within a manufacturing facility?

  A. Observation of the facility during operations.

  B. Questioning of facility management, including the facility safety officer.

  C. Analysis of facility operating reports, focusing on instances when breakdowns occurred.

  D. Review of records involving safety violations, filed by facility production employees.

  Correct Answer: A

• Question 57:

  Which of the following combinations of conditions is most likely a red flag for fraud?

  A. The practice of surprise audits and the implementation of an employee support program.

  B. Hiring an employee with a prior fraud conviction and yearly management review.

  C. Occasional accounting department overrides and discontinuation of the anonymous fraud hotline due to infrequent use.

  D. A veteran employee in upper management experiencing financial difficulties and recently implemented enhanced controls.

  Correct Answer: C

• Question 58:

  When auditing the award of a major contract, which of the following should an internal auditor suspect as a red flag for a bidding fraud scheme?

  1.

  Subsequent change orders increase requirements for low-bid items.

  2.

  Material contract requirements are different on the actual contract than on the request for bids.

  3.

  A high percentage of employees are charged to indirect accounts.

  4.

  Losing bidders are hired as subcontractors.

  A. 1 only

  B. 2 only

  C. 1 and 3.

  D. 2 and 4.

  Correct Answer: D

• Question 59:

  Which of the following best describes the misdirection of payments on accounts receivable to an employee's bank account?

  A. Fraud open on the books.

  B. Fraud hidden on the books.

  C. Fraud off the books.

  D. Fraud on the balance sheet.

  Correct Answer: C

• Question 60:

  An organization invests its savings in a volatile stock with the potential for high gains rather than a mutual fund with a lower expected return and lower volatility. This best describes which of the following risk concepts?

  A. Risk identification.

  B. Risk appetite.

  C. Risk capacity.

  D. Risk tolerance.

  Correct Answer: D