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The IIA-CIA-Part1 (Essentials of Internal Auditing) Certification Exam is a globally recognized professional certification offered by the Institute of Internal Auditors (IIA). The certification exam is designed to test the candidate's knowledge and understanding of the essential principles and practices of internal auditing. This certification is an entry-level certification and is the first step towards becoming a Certified Internal Auditor (CIA).
NEW QUESTION # 47
Which of the following statements best describes the competency requirement for an auditor regarding fraud risks encountered in an engagement execution?
- A. The auditor should be able to have comparable competencies of a person whose primary responsibility is detecting and investigating fraud.
- B. The auditor is not expected to have any competency requirement regarding fraud since the role of investigating and detecting fraud belongs to other functions in the organization.
- C. The auditor must have sufficient knowledge to evaluate the risk of fraud and the manner in which it is managed by the organization.
- D. The auditor must be able to have an appreciation of the fundamentals of fraud detection and investigation techniques.
Answer: C
Explanation:
Section: Volume C
NEW QUESTION # 48
An internal audit charter should do which of the following?
- A. Define the scope of internal audit activities.
- B. Outline the schedule of future audits.
- C. Communicate the internal audit activity's goals.
- D. Establish the size of the internal audit activity.
Answer: A
NEW QUESTION # 49
An auditor is using audit software to check inventory accuracy.
Which of the following would be an indicator of poor input edit controls?
- A. Total dollar values of zero for some parts.
- B. Reorder levels set too high.
- C. Negative quantities on hand.
- D. Alpha characters in the field for order lead time.
Answer: D
NEW QUESTION # 50
Suspecting fraud, the chief financial officer (CFO) asked the internal audit activity to investigate a significant increase in travel related expenditures. Work was performed by a qualified internal auditor. Following the completion of the engagement, the chief audit executive (CAE) reported to the CFO that no violations were found and no fraud had occurred.
According to the Standards, which of the following principles did the CAE violate?
- A. Due professional care.
- B. Proficiency.
- C. Organizational independence.
- D. Individual objectivity.
Answer: A
Explanation:
Section: Volume E
NEW QUESTION # 51
A major corporation is considering significant organizational changes. Which of the following groups would not be responsible for implementing these changes?
- A. Employees.
- B. Senior management.
- C. Outside consultants.
- D. Common stockholders.
Answer: D
NEW QUESTION # 52
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?
- A. Personal relationship threat.
- B. Familiarity threat.
- C. Self-review threat.
- D. Advocacy threat.
Answer: B
NEW QUESTION # 53
Management has implemented a segregation-of-duties policy for handling inventory. Which of the following fraud risks would be more concerning to an internal auditor following the implementation of this new policy?
- A. The risk of damages to the inventory.
- B. The risk of falsified reconciliations.
- C. The risk of collusion between parties.
- D. The risk of low-liquidity inventory.
Answer: C
NEW QUESTION # 54
A manufacturing organization's chief audit executive (CAE) was approached by the head of security from one of the manufacturer's third party suppliers The head of security requested internal audit records from a recent audit engagement involving the third-party supplier The head of security believed those records contained information that would enable to identify employees of the third-party supplier who may be involved m fraudulent activities What is the most appropriate course of action for the CAE?
- A. Consult with the manufacturer's senior management to determine whether releasing tie records would be appropriate
- B. Obtain approval from the manufacturer's audit committee regarding the release of audit records
- C. Release the records but first remove all data regarding the manufacturing organization s internal actions and procedures
- D. Deny access to the records as the third party supplier s security learn should be able to investigate then own employees.
Answer: A
NEW QUESTION # 55
An internal auditor for a large retail chain suspects that a store manager has been stealing money from cash sales by listing the sales as accounts receivable and then writing off the accounts asbad debts. Which of the following irregularities is the most likely cause of the auditor's suspicion?
- A. A much higher percentage of past-due accounts receivable than that of previous years.
- B. A much higher bad debt expense as a percentage of sales than that of previous years.
- C. A much higher percentage of past-due accounts receivable than that of other stores.
- D. A much higher bad debt expense as a percentage of sales than that of other stores.
Answer: D
NEW QUESTION # 56
If management has not established a risk management process, the internal audit activity could.
- A. Assume responsibility for the management of identified risks.
- B. Assume primary responsibility for determining if adequate and effective processes are in place.
- C. Identify and mitigate risks to the organization.
- D. Take a proactive role that supplements traditional assurance activities.
Answer: D
Explanation:
Section: Volume B
NEW QUESTION # 57
Management is installing security cameras to identify unauthorized physical access to the organization's warehouse. This is an example of which of the following types of controls?
- A. Preventive controls
- B. Primary controls.
- C. Key controls.
- D. Detective controls.
Answer: D
NEW QUESTION # 58
While reviewing first quarter sales transactions,an internal auditor discovered that 10 invoices for a new customer had not been posted into the accounts receivable subsidiary ledger. Those 10 invoices were listed in an error report automatically generated by the sales processing system. The system had rejected the invoices because the customer's account number was not found in the customer master file. In this scenario,which of the following controls was lacking?
- A. Corrective control.
- B. Detective control.
- C. Directive control.
- D. Preventive control.
Answer: A
NEW QUESTION # 59
Which of the following actions should an organization take to detect an emerging risk of potential fraud?
- A. Adopt reward and recognition programs that promote good behaviors
- B. Establish an anonymous platform for reporting suspected unethical behaviors
- C. Institute periodic educational training on expected ethical behaviors
- D. Undertake background checks for new employees as part of the hiring process
Answer: B
NEW QUESTION # 60
Which of the following is an example of a directive control?
- A. Supervisory review.
- B. Exception reports.
- C. Training programs.
- D. Segregation of duties.
Answer: C
NEW QUESTION # 61
When a risk assessment process has been used to construct an audit engagement schedule, which of the following should receive attention first?
- A. A new accounts payable system is currently undergoing testing by the information technology department.
- B. The external auditors have requested assistance for their upcoming annual audit.
- C. The existing accounts payable system has not been audited over the past year.
- D. Management has requested an investigation of possible lapping in receivables.
Answer: D
Explanation:
Section: Volume B
NEW QUESTION # 62
A small not-for-profit organization with limited resources is unable to adequately maintain appropriate segregation of duties. Considering the organization's resource constraints, which type of controls would best mitigate segregation of duty risks?
- A. Preventive controls.
- B. Compensating controls.
- C. Detective controls.
- D. Application controls.
Answer: B
Explanation:
Section: Volume D
NEW QUESTION # 63
Which of the following would be outside the scope of acquiring and developing human resources for an internal audit department?
- A. Writing job descriptions for audit staff, audit managers, and other auditing positions.
- B. Evaluating auditors' compliance with standards and level of audit effectiveness.
- C. Requiring audit staff to participate in continuing education activities.
- D. Conducting individual counseling sessions regarding professional development and performance.
Answer: B
NEW QUESTION # 64
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