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Duration, language, and format of IIA-CIA-Part1 Exam
- Language: Arabic, Chinese Simplified, Chinese Traditional, Czech, English, French, German, Hebrew, Indonesian, Italian, Japanese, Korean, Polish, Portuguese, Russian, Spanish, Thai, and Turkish
- Length of examination: 150 mins
- Number of Questions: 125
- Format: Multiple choices, multiple answers
- Passing score: 600
NEW QUESTION 70
Which of the following represents the most effective governance structure?
I. Operating
Executive
Internal
Management
Management
Auditing
Responsibility for risk
Oversight role
Advisory role
II. Oversight role
Responsibility for risk
Advisory role
III. Responsibility for risk
Advisory role
Oversight role
IV. Oversight role
Advisory role
Responsibility for risk
- A. II
- B. I Only
- C. III
- D. IV
Answer: B
NEW QUESTION 71
A manufacturing firm uses hazardous materials in the production of its products. An audit of the firm's processes related to hazardous materials should include:
I.Recommending an environmental management system as part of policies and procedures.
II.
Verifying the existence of tracking records for these materials from creation to destruction.
III.
Using consultants to avoid self-incrimination of the firm in the event illegalities were detected in an environmental audit.
IV.
Evaluating the cost provided for in an environmental liability accrual account.
- A. I, II, and IV only.
- B. III and IV only.
- C. II only.
- D. I, III, and IV only.
Answer: A
NEW QUESTION 72
Which of the following would provide the best assessment of an organization's ethical climate?
- A. Frequency of fraud reported and results of subsequent investigations.
- B. Evidence of training provided to the board of directors on ethical issues.
- C. Number of years that directors have been appointed to the board.
- D. Clarity and consistency of consequences imposed by the board of directors for ethical violations.
Answer: D
Explanation:
Section: Volume B
NEW QUESTION 73
An internal auditor is planning an operational audit of the accounts payable function. Which of the following best mitigates the risk of the organization being a victim of disbursement fraud by employees?
- A. The accounts payable trial balance is reconciled to the general ledger.
- B. Accounts payable are aged by vendors.
- C. Accounts payable payment records are checked against supplier invoices.
- D. The accounts payable function is properly segregated from the cash custody function.
Answer: D
Explanation:
Section: Volume D
NEW QUESTION 74
An internal auditor is checking the accuracy of a computer-printed inventory listing to determine whether the total dollar value of inventory is significantly overstated. Because there is no time or resources to check all items in the warehouse, a sample of inventory items must be used. If the sample size is fixed, which of the following would be the most accurate sampling approach?
- A. Employ simple random sampling.
- B. Select those items that are most easily inspected.
- C. Sample so that the probability of a given inventory item being selected is proportional to the number of units sold for that item.
- D. Sample so that the probability of a given inventory item being selected is proportional to its book value.
Answer: D
Explanation:
Section: Volume C
NEW QUESTION 75
In order to effectively handle conflict between audit team members, an audit team leader should:
- A. Transfer one of the team members to another assignment.
- B. Avoid addressing the conflict until the leader is sure that there is a problem.
- C. Be assertive and keep the team members focused on a resolution.
- D. Ask one of the team members to resolve the issue by being more conciliatory.
Answer: C
Explanation:
Section: Volume B
NEW QUESTION 76
According to The IIA's Code of Ethics, which of the following actions violates the principle of confidentiality?
- A. Providing a friend with the marketing strategic plan, which she will use to prepare her university thesis.
- B. Agreeing to reword an observation to avoid the client complaining directly to the auditor's supervisor.
- C. Accepting a consulting request in the IT department without possessing the requisite experience.
- D. Providing personal tax preparation services for a fee for several employees during the lunch hour.
Answer: A
NEW QUESTION 77
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.
Answer: B
NEW QUESTION 78
Which of the following are core responsibilities to be included in the internal audit charter?
1.Review reliability and integrity of financial and operating information and the means used toidentify,measure,classify,and report such information.
2.Determine the adequacy and effectiveness of the organization's systems of internal accounting and operating controls.
3.Participate in the planning and performance of audits of potential acquisitions with the organization's outside accountants and other members of the corporate staff.
4.Report to those members of management who should be informed of results of audit examinations,the audit opinions formed,and the recommendations made.
- A. 1 and 2.
- B. 2 and 4.
- C. 2 and 3.
- D. 1 and 4.
Answer: A
NEW QUESTION 79
An internal auditor used a questionnaire during an interview to gather information about the nature of credit sales processing. The questionnaire did not cover some pertinent information offered by the person being interviewed, and the auditor did not document the potential problems for further investigation. The primary deficiency with the above process is that:
- A. A questionnaire was used in a situation where a structured interview should have been used.
- B. The use of a questionnaire precluded the auditor from documenting other information.
- C. The engagement program was incomplete.
- D. The auditor failed to consider the importance of the information offered.
Answer: D
NEW QUESTION 80
According to The IIA's Code of Ethics, which of the following statements is true?
- A. 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.
- B. 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.
- C. When an internal auditor limits the scope of the audit engagement after learning that management is hiding relevant information, he demonstrates integrity.
- D. 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, he fails to demonstrate objectivity.
Answer: D
NEW QUESTION 81
Which of the following is considered a common red flag indicator in helping to uncover fraud?
- A. Improper segregation of duties.
- B. Termination from previous employer.
- C. Repeated poor performance.
- D. Experiencing financial difficulty.
Answer: D
NEW QUESTION 82
A company's chief audit executive determines that the internal audit staff does not have the requisite skills to conduct an audit of the financial derivatives area. Which of the following actions would be the least acceptable?
- A. Notify the audit committee of the problem and consult with them regarding outsourcing the audit engagement to a qualified external auditing firm.
- B. Notify the audit committee of the problem and assign the most competent auditors to perform the audit engagement.
- C. Determine the requisite knowledge needed and obtain the proper training for auditors if such training is available within the appropriate time framework outlined by the audit committee.
- D. Employ the skills of a financial derivatives expert to consult on the project, and supplement the consulting with a local seminar on financial derivatives.
Answer: B
NEW QUESTION 83
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. I and II only.
- B. II only.
- C. I, II, and III only.
- D. I, III, and IV only.
Answer: A
NEW QUESTION 84
Which of the following controls would best mitigate the risk of fraud in the bidding process?
- A. Allow the higher tenders to rebid.
- B. Restrict the time to submit tender bids.
- C. Have a bidding committee open the tender bids.
- D. Keep minutes of pre-bid meetings.
Answer: B
NEW QUESTION 85
Which of the following is a way to demonstrate an individual internal auditor's competency through continuing professional development?
- A. Define average training hours per auditor as a team performance measure
- B. Review training records for all internal auditors
- C. Create different training budgets for each of the internal auditors
- D. Analyze internal audit client survey feedback following audits
Answer: D
NEW QUESTION 86
An organization's chief audit executive (CAE) determines that the internal audit staff does not have the requisite skills to conduct an audit of the financial derivatives area. Which of the following would be the best course of action for the CAE to follow?
- A. Outsource the audit engagement to a qualified external auditing firm without burdening the audit committee with the decision.
- B. Notify the audit committee of the problem, and assign the most competent auditors on staff to perform the audit engagement.
- C. Employ the skills of a financial derivatives expert to consult on the project, and supplement the consulting with a local seminar on financial derivatives.
- D. Determine the requisite knowledge needed, and obtain the proper training for auditors, even if the training will significantly push back the project's timeframe as outlined by the audit committee.
Answer: C
NEW QUESTION 87
The main reason to establish internal controls in an organization is to:
- A. Safeguard the resources of the organization.
- B. Ensure the accuracy, reliability, and timeliness of information.
- C. Encourage compliance with policies and procedures.
- D. Provide reasonable assurance on the achievement of objectives.
Answer: D
Explanation:
Section: Volume B
NEW QUESTION 88
An internal auditor plans to use an analytical review to verify the correctness of various operating expenses in a division. The use of an analytical review as a verification technique would not be a preferred approach if:
- A. The auditor notes strong indicators of a specific fraud involving this account.
- B. The company has relatively stable operations which have not changed much over the past year.
- C. The operating expenses vary in relation to other operating expenses, but not in relation to revenue.
- D. The auditor would like to identify large, unusual, or non-recurring transactions during the year.
Answer: A
NEW QUESTION 89
If earnings on financial statements for internal use only have been manipulated in the past, an internal auditor is likely to focus on which of the following?
- A. Whether there have been changes in accounting principles that materially affect the financial statements.
- B. Whether accounting estimates are reasonable given past actual results.
- C. The timing of revenue recognition and the valuation of inventories.
- D. The proper accrual of payables at the end of the interim period.
Answer: C
NEW QUESTION 90
According to the Standards,which of the following must an internal auditor take into consideration when performing an assurance engagement of treasury operations?
I.The audit committee has requested assurance of the treasury department's compliance with a new policy on the use of financial instruments.
II.Treasury management has not instituted any risk management policies.
III.Due to the recent sale of a division,the amount of cash and marketable securities managed by the treasury department has increased by 350 percent.
IV.The external auditors have indicated some difficulties in obtaining account confirmations.
- A. I,II,and IIIonly
- B. I and IVonly
- C. I and IIonly
- D. II,III,and IVonly
Answer: A
Explanation:
Topic 3, Volume C
NEW QUESTION 91
A company has entered into a $20, 000, 000 fixed-price contract with a general contractor for the construction of a new retail outlet. For this contract, which of the following would represent the greatest risk?
- A. Failure to complete the project within budget.
- B. Excessive labor charged to the project.
- C. Poor physical protection of materials and equipment.
- D. Substitution of inferior materials.
Answer: D
NEW QUESTION 92
Which of the following internal auditor attributes are affected by a conflict of interest?
- A. Independence and authority.
- B. Objectivity and due professional care.
- C. Authority and proficiency.
- D. Independence and objectivity.
Answer: D
NEW QUESTION 93
If appropriate safeguards exist, which of the following is considered a legitimate internal audit role within risk management at an organization?
- A. Imposing risk management processes.
- B. Taking accountability for risk management.
- C. Providing consolidated reporting on risks.
- D. Making decisions on risk responses.
Answer: C
NEW QUESTION 94
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