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Duration, language, and format of IIA-CIA-Part1 Exam
- Number of Questions: 125
- Length of examination: 150 mins
- Passing score: 600
- Format: Multiple choices, multiple answers
- Language: Arabic, Chinese Simplified, Chinese Traditional, Czech, English, French, German, Hebrew, Indonesian, Italian, Japanese, Korean, Polish, Portuguese, Russian, Spanish, Thai, and Turkish
NEW QUESTION 34
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. The auditor discovered an instance of potential fraud and reported it immediately to management, but did not alert authorities outside the organization.
- 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. After determining that the cash function internal controls were strong, the audit report assured senior management that fraud was not present.
Answer: D
Explanation:
Section: Volume E
NEW QUESTION 35
An internal auditor is testing,on a sample basis,whether invoices paid between January 1 and December 31 are supported by appropriately approved purchase orders. Over 25,000 invoices were paid during the fiscal year,which runs from the first of April to the end of March. The auditor sets the acceptable risk of assessing control risk too low at 5% and the tolerable deviation rate at 5%. The internal auditor consults the previous audit and sets the expected population deviation rate at 1%. Sample size (77) is selected from a table and rounded up to 80. No sample deviations were found. The upper deviation limit was 3.7%.
Which of the following statements represents a valid conclusion regarding this information?
- A. I am 95% confident that the true,but unknown,population deviation rate is less than or equal to 3.7%. Results indicated that the sample size was too small,as no sample deviations were found.
- B. I am 95% confident that the actual population deviation rate is 3.7%. Since this is less than the tolerable deviation rate,quantitative attribute testing results indicate that the control is effective.
- C. I am 95% confident that the true,but unknown,population deviation rate is less than or equal to 3.7%. The quantitative attribute testing results indicate that the control is effective.
- D. I am 95% confident that the true,but unknown,population deviation rate is less than or equal to 3.7%. The quantitative attribute testing results indicate that the control is not effective.
Answer: C
NEW QUESTION 36
Which of the following is true of a horizontal flowchart as compared to a vertical flowchart?
- A. It brings into sharper focus the assignment of duties and independent checks on performance.
- B. It provides more room for written descriptions that parallel the symbols.
- C. It is usually longer.
- D. It does not provide as broad a picture at a glance.
Answer: A
NEW QUESTION 37
Which of the following is not true with regard to the internal audit charter?
- A. It provides a basis for evaluating the internal audit activity.
- B. It defines the authorities and responsibilities of the internal audit activity.
- C. It specifies the minimum resources needed for the internal audit activity.
- D. It should be approved by senior management and the board.
Answer: C
NEW QUESTION 38
Which of the following sources of evidence would be least persuasive regarding potential waste and inefficiency on the part of a contractor?
- A. The contractor's certification that it has not incurred any waste or inefficiencies.
- B. A comparison of contract expenses with those of similar projects.
- C. A walk-through of the contractor's manufacturing and development facilities.
- D. An examination of the nature of contract expenses incurred.
Answer: A
NEW QUESTION 39
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. Compensating controls.
- B. Application controls.
- C. Preventive controls.
- D. Detective controls.
Answer: A
Explanation:
Section: Volume D
NEW QUESTION 40
----
When comparing an organization's current performance to that of the prior year, an internal auditor found that:
Total labor costs had increased.
More overtime costs had been incurred.
The total number of workers had increased.
Net income was 10 percent lower.
Based solely on this information, which of the following is a valid conclusion?
- A. Net income per worker decreased.
- B. Worker efficiency decreased.
- C. Wage rates increased.
- D. Total labor hours increased.
Answer: A
NEW QUESTION 41
According to the COSO enterprise risk management (ERM) framework, which of the following is not part of the new paradigm in ERM?
- A. Assessing the risk factors.
- B. Enhancing risk response decisions.
- C. Aligning risk appetite and strategy.
- D. Reducing operational surprises and losses.
Answer: A
NEW QUESTION 42
Which of the following actions should an internal auditor take to exercise due professional
care?
1.Consider the probability of significant noncompliance in each audit engagement.
2.Weigh the cost of assurance against the benefits.
3.Perform assurance procedures with sufficient care to ensure that all risks are identified.
- A. 1 and 2 only
- B. 1,2,and 3
- C. 2 and 3 only
- D. 1 and 3 only
Answer: A
NEW QUESTION 43
Once the cause of a problem has been identified, the next step is to:
- A. Select a solution.
- B. Generate alternative solutions.
- C. Consider the reaction of competitors to various courses of action.
- D. Identify the problem.
Answer: B
NEW QUESTION 44
What would a chief audit executive most likely recommend that an internal auditor do to prepare for an increased demand in advisory services?
- A. Specialize in one specific aspect of internal auditing, such as risk assessment or information technology controls.
- B. Participate in continuing professional development activities, such as training courses or rotations into other business units.
- C. Expand the scope of every future internal audit activity to all parts of the organization, rather than only the departments identified in the activity's charter.
- D. Review records from prior engagements to determine how best to align the current engagement activities with prior activities.
Answer: B
NEW QUESTION 45
An internal auditor has taken an attributes sample of a bank's existing loan portfolio. Out of a sample of 60 loans,the auditorfound:
- Four that were not properly collateralized. - Five that were not in compliance with bank policies (other than lack of collateralization). - Four that were part of a related-party group,but were set up as separate loan entities. - Of the 60 loans selected in the sample,these errors were noted on a total of 10 loans. - Several loans had multiple problems.
Which of the following conclusions can the auditor reach from these observations?
1.There is sufficient evidence that fraudulent activity is taking place by one or more of the
bank's lending officers.
2.The financial statements will be misstated as a result of these actions.
3.There are significant noncompliance audit findings that should be reported.
- A. 1 and 3only
- B. 3only
- C. 2 and 3only
- D. 1 and 2only
Answer: B
NEW QUESTION 46
To assure that the technical proficiency of internal auditors is appropriate for the audit engagements to be performed, a chief audit executive should:
- A. Oversee a training program that matches the actual training provided with the interests of individual auditors.
- B. Ensure that each newly hired auditor is qualified in all of the disciplines needed to accomplish the department's audit mission.
- C. Require all of the audit staff to pursue a minimum number of continuing professional education hours each year.
- D. Consider the scope of work and level of responsibility when establishing criteria for education and experience in filling internal auditing positions.
Answer: D
NEW QUESTION 47
During the planning phase of an audit of suspected overbilling on contracts for security services, an auditor should perform all of the following except:
- A. Interviewing the manager who requested the audit engagement.
- B. Obtaining a copy of the contract between the two organizations.
- C. Preparing an engagement program.
- D. Interviewing an official of the security services company to determine the cause of recent increases in billings for services.
Answer: D
NEW QUESTION 48
After being terminated due to downsizing, an internal auditor finds a different job with an organization in the same industry. Which of the following actions would violate the IIA Code of Ethics?
- A. In preparing for an audit at the previous organization, the auditor had conducted a great deal of research on the Internet at home to identify best practices for the management of a treasury function. The auditor has retained much of the research and uses it to conduct an audit of the new employer's treasury function.
- B. To determine audit priorities in the new job, the auditor uses the audit risk approach that the auditor's previous employer used, without receiving permission to do so.
- C. At the new organization, the auditor is asked to develop forms to implement probability-proportional-to-size sampling. Although unsure of how to perform this type of sampling, the auditor proceeds without asking for assistance.
- D. In the first week at the new organization, the auditor discovers a high fraud risk surrounding the organization's database and suggests that the information technology department implement a new password system to prevent fraudulent actions before they occur.
Answer: C
NEW QUESTION 49
An internal audit charter should do which of the following?
- A. Communicate the internal audit activity's goals.
- B. Establish the size of the internal audit activity.
- C. Define the scope of internal audit activities.
- D. Outline the schedule of future audits.
Answer: C
NEW QUESTION 50
Which of the following would be the most effective action for an internal audit activity to take in order to assist in improving an organization's ethical climate?
I.Review formal and informal processes within the organization that could promote unethical behavior.
II.
Conduct surveys of employees, suppliers, and customers regarding ethics.
III.
Assess the employees' knowledge of and compliance with the organization's code of conduct.
- A. I and II only.
- B. I only.
- C. II and III only.
- D. I, II, and III.
Answer: D
NEW QUESTION 51
Internal auditors exercise judgment about the type and amount of information to be collected. The primary purpose of this judgment is to:
- A. Eliminate the risk of drawing incorrect conclusions.
- B. Provide a sound basis for audit observations and recommendations.
- C. Comply with the Standards.
- D. Minimize the cost of the audit engagement.
Answer: B
NEW QUESTION 52
Management has requested that an internal auditor serve as member of a task force that will review current receivables practices and make recommendations to improve processes. Which of the following is the most appropriate response by the internal auditor?
- A. Accept the assignment if the auditor believes that it will not impair objectivity in future audit engagements.
- B. Do not accept the assignment because the assignment is not part of an approved audit plan.
- C. Accept the assignment provided that such consulting services are defined in the charter.
- D. Decline the assignment because participation on task forces will impair the auditor's objectivity in future audit engagements.
Answer: C
NEW QUESTION 53
Which of the following procedures would provide the best evidence of the effectiveness of a credit-granting function?
- A. Ask the credit manager about the effectiveness of the function.
- B. Review the trend in receivables write-offs.
- C. Observe the process.
- D. Check for evidence of credit approval on a sample of customer orders.
Answer: B
Explanation:
Section: Volume A
NEW QUESTION 54
Which of the following items of evidence is most valid to support a finding that a public utility's repair crews are sometimes required to work under unsafe conditions?
- A. Written and signed descriptions from repair crew members of the unsafe conditions that they have had to endure.
- B. Reports showing increases in the number of days of sick leave for individuals on repair crews.
- C. Videotapes of repair crews working in a situation that is unsafe.
- D. Audio taped testimonials from repair crew members who were required to work under unsafe conditions.
Answer: C
NEW QUESTION 55
An internal auditor prepared a workpaper that consisted of a list of employee names and identification numbers as well as the following statement:
"A statistical sample of 40 employee personnel files was selected to verify that they contain all
documents required by company policy 501 (copy attached). No exceptions were noted." The auditor did not place any audit verification symbols on this workpaper.
Which of the following changes would most improve the auditor's workpaper?
- A. Listing of the actual documents examined for each employee.
- B. Removal of the employee names to protect their confidentiality.
- C. Use of audit verification symbols to show that each file was examined.
- D. Justification for the sample size.
Answer: D
NEW QUESTION 56
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