[Jan 22, 2022] IIA-CIA-Part1 certification guide Q&A from Training Expert Actual4test
IIA-CIA-Part1 Certification Overview Latest IIA-CIA-Part1 PDF Dumps
NEW QUESTION 95
Why is a code of ethics for the internal audit profession necessary?
- A. It provides auditors with protection from lawsuits.
- B. It ensures that all members of the profession possess the same level of competence.
- C. It guides internal auditors in their service to others.
- D. It requires auditors to exhibit loyalty to their organizations.
Answer: C
NEW QUESTION 96
Which of the following activities most significantly increases the risk that a bank will make poor-quality loans to its customers?
- A. The bank's loan documentation may not meet the government's disclosure requirements.
- B. Loan officers may override the lending criteria established by senior management.
- C. Fees paid by the borrower at the time of the loan may not be deposited in a timely manner.
- D. Borrowers may not sign all required mortgage loan documentation.
Answer: B
Explanation:
Section: Volume A
NEW QUESTION 97
An organization has developed a model to determine the most profitable rate of production. The organization varies the cost of labor in the model to determine how much the changes affect the optimal production level.
Which type of analysis does this scenario demonstrate?
- A. Decision.
- B. Forecast.
- C. Sensitivity.
- D. Critical path.
Answer: C
Explanation:
Section: Volume D
NEW QUESTION 98
Due to urgent requests from management, a busy internal audit activity finds that it can no longer meet all of its commitments contained in the annual audit plan. The best course of action for the chief audit executive to take would be to:
- A. Advise the board immediately and seek their support for additional resources to meet the needs of the plan.
- B. Advise senior management and request that they reconsider these additional requests using more rigorous risk assessment and prioritization factors.
- C. Continue with the plan and seek opportunities to adjust priorities and reallocate resources.
- D. Advise the board and senior management and request a reassessment of the plan.
Answer: D
NEW QUESTION 99
An auditor plans to analyze customer satisfaction, including. (1) customer complaints recorded by the customer service department during the last three months; (2) merchandise returned in the last three months; and (3) responses to a survey of customers who made purchases in the last three months.
Which of the following statements regarding this audit approach is correct?
- A. Steps 1 and 2 of the analysis are not necessary or cost-effective if the customer survey is comprehensive.
- B. The survey would not consider customers who did not make purchases in the last three months.
- C. Although useful, such an analysis does not address any risk factors.
- D. Analysis of three months' activity would not evaluate customer satisfaction.
Answer: B
Explanation:
Section: Volume A
NEW QUESTION 100
During the planning phase of an audit of suspected overbilling on contracts for security services, an internal auditor should perform all of the following except:
- A. Interview an official of the security services company to determine the cause of recent increases in billings for services.
- B. Interview the manager who requested the audit engagement.
- C. Prepare an engagement program.
- D. Obtain a copy of the contract between the two organizations.
Answer: A
NEW QUESTION 101
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. Sample so that the probability of a given inventory item being selected is proportional to the number of units sold for that item.
- B. Employ simple random sampling.
- C. Sample so that the probability of a given inventory item being selected is proportional to its book value.
- D. Select those items that are most easily inspected.
Answer: C
Explanation:
Section: Volume C
NEW QUESTION 102
During an engagement, an internal auditor decided to use variance analysis as an auditing techniques. Which of the following steps should the auditor pursue if he discovers unexpected deviations of actual results from budget?
- A. Conclude that the budget was unreasonably set and accept the deviations.
- B. Perform alternative forms of analytical procedures which provide no deviations.
- C. Gather additional information to determine the cause of the deviations.
- D. Report the deviations immediately to the audit committee.
Answer: C
Explanation:
Section: Volume E
NEW QUESTION 103
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 104
Which of the following is accomplished by the internal audit charter?
- A. It states the nature of the chief audit executive's administrative reporting relationship with the board.
- B. It defines the scope of internal and external audit activities.
- C. It establishes the audit committee's position within the organization.
- D. It authorizes access to records,personnel and physical properties relevant to the performance of engagements.
Answer: D
NEW QUESTION 105
Which of the following is not an advantage of face-to-face interviews over electronic surveys?
- A. Survey designers can use a wider variety of question types.
- B. The response rate is typically higher.
- C. Interviewers can increase a respondent's comprehension of questions.
- D. They are less expensive to distribute and compile data.
Answer: D
NEW QUESTION 106
This chief audit executive (CAE) engaged an internal auditor to consult on an organization's complex information technology system. Shortly after beginning the engagement, the auditor unexpectedly resigned. Unfortunately, this auditor was the only available auditor with the necessary expertise. The CAE will not be able to hire someone with similar expertise in time to meet a regulatory deadline.
Which of the following would be the best course of action for the CAE to take?
- A. Continue with the engagement in order to meet the regulatory deadline, but highlight areas in the final report that might need to be revised in the future.
- B. Delay the engagement and inform the board of the situation, asking them to provide acceptable alternatives for completing the engagement.
- C. Ask that a senior member of the organization's IT department with the required systems expertise join the audit team to assist in completing the engagement.
- D. Remove the planned engagement from the audit plan and explain to senior management the problems with moving forward without an auditor with the necessary expertise.
Answer: B
NEW QUESTION 107
Which of the following offers the best evidence that the internal audit activity has achieved organizational independence?
- A. An independent third party has assessed the organization's system of internal controls to be adequate and effective.
- B. The internal audit charter is drafted properly and approved by the appropriate parties.
- C. The chief audit executive reports both functionally and administratively to the CEO.
- D. The mission statement and strategy of the internal audit activity demonstrates alignment to organizational objectives.
Answer: C
NEW QUESTION 108
A former line supervisor from the Financial Services Department has completed six months of a two-year development opportunity with the internal audit activity (IAA). She is assigned to a team that will audit the organization's payroll function,which is managed by the Human Resources Department. Which of the following statements is most relevant regarding her independence and objectivity with respect to the payroll audit?
- A. She may participate,but only after she has completed one year with the IA
- B. She may participate,but she must be supervised by the auditor in charge.
- C. She may participate,because she did not previously work in the Human Resources Department.
- D. She may participate for training purposes,to build her knowledge of the IAA.
Answer: C
NEW QUESTION 109
According to the International Professional Practices Framework, which of the following is the appropriate division of responsibilities for the coordination of internal and external audit efforts?
I. Oversight of Work
Coordination of Activities
Chief audit executive
Senior management
II. Board
Chief audit executive
III. Chief financial officer
Chief audit executive
IV. Board
Chief financial officer
- A. I
- B. IV.
- C. III.
- D. II.
Answer: D
NEW QUESTION 110
During an interview with a data-entry clerk in the human resources department, an internal auditor recognizes a potentially significant weakness with a database system used to track employee performance ratings. Which of the following actions should the auditor take after discovering the weakness?
- A. Schedule a series of follow-up interviews with the data-entry clerk.
- B. Immediately document the weakness and write a report to the data-entry clerk's superior.
- C. Question the data-entry clerk indirectly to help obtain more factual information about the weakness.
- D. Avoid either directly or indirectly confronting the data-entry clerk about the system weakness.
Answer: C
NEW QUESTION 111
Which of the following techniques would provide the most compelling evidence that a safety hazard exists within a manufacturing facility?
- A. Review of records involving safety violations,filed by facility production employees.
- B. Questioning of facility management,including the facility safety officer.
- C. Analysis of facility operating reports,focusing on instances when breakdowns occurred.
- D. Observation of the facility during operations.
Answer: D
NEW QUESTION 112
A chief audit executive (CAE) is reviewing the internal audit activity's performance and is concerned that the average number of revisions to findings is steadily rising, making it increasingly difficult to trace the finding to the supporting evidence and workpapers. According to MA guidance, which of the following elements of the internal audit activity's quality assurance and improvement program would provide the CAE with the most helpful insight into the cause of this problem?
- A. The overall effectiveness of the internal audit activity's periodic self assessments.
- B. The adequacy of the day-to-day supervision and review process.
- C. The scope and frequency of external assessments.
- D. The type of audit productivity and performance statistics reported.
Answer: B
NEW QUESTION 113
Which of the following actions indicates a lack of due professional care by an internal auditor performing an audit of a store's cash function?
- A. After determining that the cash function internal controls were strong, the audit report assured senior management that fraud was not present.
- B. The auditor tested samples of transactions to test the cash function's process flows.
- C. The audit report included a well-supported recommendation for a reduction in staff even though such a reduction might adversely impact morale.
- D. The auditor discovered an instance of potential fraud and reported it immediately to management, but did not alert authorities outside the organization.
Answer: A
NEW QUESTION 114
Which the following activities should be performed by the internal audit activity to facilitate an effective relationship with the audit committee?
1. Periodically report about the accounting standards followed by the organization.
2. Provide assurance to the audit committee that its charter, activities, and processes are appropriate.
3. Ensure that the role and activities of the internal audit activity are clearly understood and responsive to the needs of the audit committee.
4. Maintain open and effective communications with the audit committee.
- A. 1, 3, and 4 only
- B. 1 and 2 only
- C. 2, 3, and 4 only
- D. 3 and 4 only
Answer: C
Explanation:
Section: Volume E
Explanation/Reference:
NEW QUESTION 115
Which of the following would be the best example of a monitoring control for a chain of restaurants?
- A. Proof of bank deposit is transmitted to corporate headquarters on a daily basis.
- B. Corporate management prepares a detailed analysis of gross margin per restaurant and investigates those showing a significantly lower gross margin.
- C. Each restaurant manager reconciles the cash received with the food orders recorded on the computer.
- D. All food orders must be entered through the computer, and there is segregation of duties between the food servers and the cooks.
Answer: B
NEW QUESTION 116
A manufacturing line supervisor joins the internal audit activity for a two-year rotational job assignment and is assigned to an accounts receivable audit. With regard to this assignment, which of the following should be the primary concern of the audit manager?
- A. Organizational independence.
- B. Individual objectivity.
- C. Due professional care.
- D. Individual independence.
Answer: C
NEW QUESTION 117
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