IIA-CIA-PART1 Online Practice Questions and Answers

An internal auditor is reviewing a new automated human resources system. The system contains a table of pay rates which are matched to the employee job classifications. The best control to ensure that the table is updated correctly for only valid pay changes would be to:

A. Limit access to the data table to management and line supervisors who have the authority to determine pay rates.

B. Require a supervisor in the department, who does not have the ability to change the table, to compare the changes to a signed management authorization.

C. Ensure that adequate edit and reasonableness checks are built into the automated system.

D. Require that all pay changes be signed by the employee to verify that the change goes to a bona fide employee.

Which of the following best describes the underlying premise of the COSO enterprise risk management framework?

A. Management should set objectives before assessing risk.

B. Every entity exists to provide value for its stakeholders.

C. Policies are established to ensure that risk responses are performed effectively.

D. Enterprise risk management can minimize the impact and likelihood of unanticipated events.

Which of the following situations allows for the most objectivity on the part of an internal auditor?

A. Assessing testing procedures in a new computer system.

B. Performing a risk assessment of a new financial instrument.

C. Drawing conclusions from a sample of financial transactions.

D. Comparing current environmental activities against legislation.

The primary role of the internal audit activity in regard to an organization's ethical climate is to:

A. Participate as chief ethics officer.

B. Periodically assess the ethical climate.

C. Utilize surveys to evaluate employee ethics.

D. Demonstrate ethical behavior.

Which of the following is the most appropriate outcome measure for assessing safety operations?

A. Number of inspections conducted.

B. Tests made of equipment.

C. Reduction in machine down time due to accidents.

D. Number of operations observed.

One of an organization's quality objectives is to reduce the amount of rework needed in the production cycle.

Which of the following controls would be the least effective in achieving this objective?

A. Machinery is routinely maintained to avoid production malfunctions.

B. Employees are rewarded for suggestions that lead to quality improvements.

C. Quality inspectors are assigned to identify any defects in the finished product.

D. Daily reconciliations are performed between finished goods and the number of rejects.

A retail sales company has discontinued a product that normally sold for $100. During the first month of a sale of the product, a 20 percent discount was given. Later that sale price was reduced by an additional 40 percent. What was the overall discount from the original selling price?

A. 60 percent.

B. 52 percent.

C. 48 percent.

D. 30 percent.

Which of the following types of information would an internal auditor expect to find in the supporting documentation for a high-level accounts payable process flowchart?

A. A copy of the new customer request form.

B. An overview of the steps for validating invoices.

C. The number of payments paid before the due date of the invoice.

D. The payment terms and credit limit of the vendor to be paid.

An internal auditor is assessing the risk of employees falsifying reimbursement requests for business-related meals or travel. Which of the following procedures would the internal auditor most likely perform first?

A. Review the supplemental documentation provided for a sample of reimbursement requests.

B. Interview the payroll/accounting supervisor to determine what controls exist to prevent fraud.

C. Determine whether or not the payroll/accounting department has been subject to regular review.

D. Establish a flowchart of the payroll/accounting functions that include any controls currently in place.

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. 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.

C. Notify the audit committee of the problem, and assign the most competent auditors on staff to perform the audit engagement.

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.

An accounts receivable clerk receives cash payments, posts the payments to customer accounts, and

prepares the daily cash deposit.

The clerk has been stealing some cash and manipulating the customer payments to hide the theft.

This fraud could be detected with which of the following controls?

A. Monthly bank reconciliations are performed by the clerk on a timely basis.

B. Total cash deposits for the month are reconciled to the cash receipts journal.

C. Names, amounts, and dates on remittance advices are reconciled with the names, amounts, and dates recorded in the cash receipts journal.

D. Total cash deposits are compared with the bank reconciliation.

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.

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

Sometimes, internal audit staff may partner with operating managers to rank risks. Which of the following outcomes may be the most beneficial aspects of this strategy?

1.

Reappraising risks levels.

2.

Providing accurate information to management.

3.

Marketing the internal audit activity.

4.

Planning safeguards for assets in high-risk areas.

A. 1 and 2.

B. 1 and 3.

C. 2 and 3.

D. 3 and 4.

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. Aligning risk appetite and strategy.

C. Enhancing risk response decisions.

D. Reducing operational surprises and losses.