IIA-CHAL-QISA Exam Practice Test Instant Access

Question 1

The chief audit executive (CAE) has assigned an internal auditor to an upcoming engagement. Which of the following requirements would most likely indicate that the Internal auditor was assigned to an assurance engagement?

AThe assigned internal auditor must determine the objectives, scope, and techniques of the engagement.

BThe CAE must personally obtain the needed skills, knowledge, or other competencies if the internal auditor does not have them.

CThe assigned internal auditor must not assume management responsibilities while performing the engagement.

DThe assigned internal auditor must maintain objectivity while performing the engagement

Answer : C

Introduction:

Assurance engagements require internal auditors to maintain objectivity and avoid conflicts of interest.

Role of Internal Auditors in Assurance Engagements:

They must remain independent and not take on roles that could compromise their impartiality.

Options Analysis:

Option A: Determining the objectives, scope, and techniques can be part of their role but does not define an assurance engagement specifically.

Option B: The CAE obtaining skills or competencies personally is not a standard requirement for assurance engagements.

Option C: Not assuming management responsibilities is crucial to maintain independence and objectivity during assurance engagements.

Option D: While maintaining objectivity is important, it is not the distinguishing feature of being assigned to an assurance engagement.

Conclusion:

The key requirement indicating an internal auditor was assigned to an assurance engagement is that they must not assume management responsibilities during the engagement.

Internal Audit Standards and Practice Guides

Question 2

Which of the following actions would an internal auditor perform primarily during a consulting engagement of a debt collections process?

AReviewing journal entries for accuracy and completeness.

BComparing the policies and procedures to regulatory collections guidance.

CAdvising management on streamlining the recording of accounts receivable.

DPerforming a walk-through of the debt collections process to determine whether proper segregation of duties exists

Answer : C

A consulting engagement involves providing advice and recommendations to improve processes, controls, and efficiency.

Option A: Reviewing journal entries for accuracy and completeness.

This task is typically performed during assurance engagements, not consulting engagements, where the focus is on evaluating and verifying records.

Option B: Comparing the policies and procedures to regulatory collections guidance.

This is more aligned with compliance auditing or assurance engagements, ensuring that practices align with regulatory requirements.

Option C: Advising management on streamlining the recording of accounts receivable.

This action is typical of a consulting engagement, where the auditor provides advice and recommendations to improve business processes and efficiency.

Option D: Performing a walk-through of the debt collections process to determine whether proper segregation of duties exists.

This is an activity more typical of an assurance engagement, where the auditor evaluates the effectiveness of controls.

Consulting engagements, as defined by the IIA, involve activities where internal auditors provide advisory services to help an organization improve its governance, risk management, and control processes. This often includes providing insights and recommendations for process improvements, such as streamlining accounts receivable recording, which aligns with the role described in Option C.

By referencing these principles and guidelines, the answers and explanations provided are validated and grounded in established internal audit standards and accounting practices.

Question 3

Which of the following best describes why an internal audit activity would consider sending written preliminary observations to the audit client?

AWritten observations allow for more interpretation.

BWritten observations help the internal auditors express the significance.

CWritten and verbal observations are equally effective.

DWritten observations limit premature agreement

Answer : C

Audit workpapers are essential documents that provide evidence of the audit work performed and the conclusions reached.

Option A: While review notes can be useful, they do not need to be retained if they do not add value to the audit evidence.

Option B: Audit workpaper documentation policies are typically established by the internal audit department, not reviewed or approved by the audit committee.

Option C: Management should not review the workpapers for accuracy as this could compromise the independence of the audit.

Option D: Preparing workpapers helps auditors document their work thoroughly, facilitating learning and professional development.

Question 4

Which of the following statements is true regarding internal auditors and other assurance providers?

AAssurance providers who report to management and/or are part of management cannot provide control self-assessments services

BInternal auditors should always reperform and validate audit work completed by external assurance providers.

CInternal auditors may rely on the work of internal compliance teams to expand their coverage of the organization without increasing direct audit hours.

Dinternal auditors can rely on the work of other assurance providers only if the other assurance providers report directly to the board

Answer : C

Collaboration with Compliance Teams: Internal auditors often collaborate with internal compliance teams to leverage their work. This allows auditors to gain insights and expand their audit coverage efficiently.

IIA Standards: According to the Institute of Internal Auditors (IIA), internal auditors can rely on the work of other assurance providers, including internal compliance teams, as long as the auditors assess the adequacy and competency of the compliance team's work.

Efficiency in Audit Coverage: By relying on internal compliance teams, internal auditors can ensure comprehensive coverage of the organization without significantly increasing direct audit hours, thus enhancing efficiency.

Question 5

An accounts payable clerk has recently transferred into the internal audit activity and has been assigned to an engagement related to accounts payable processes for which he was previously responsible Which of the following is the best action for the new internal auditor to take?

AIf it is an assurance engagement, accept the assignment because direct knowledge of the existing accounts payable processes will provide depth and add more value

BIf it is a consulting engagement, decline the assignment and ask to be reassigned, because in a consulting engagement the auditor must not assess operations for areas in which they were previously responsible.

Cif it is a consulting engagement, accept the assignment because direct knowledge of the existing accounts payable processes will provide depth and add more value

DIf it is an assurance engagement, accept the assignment because the chief audit executive had knowledge of the internal auditor's previous role when this engagement was assigned.

Answer : B

Conflict of Interest: For both assurance and consulting engagements, it is crucial to avoid conflicts of interest. An auditor assessing processes they were previously responsible for can compromise objectivity and independence.

IIA Standards: The IIA's Code of Ethics and standards emphasize maintaining objectivity and avoiding conflicts of interest. This is particularly important in consulting engagements where the auditor's recommendations could be influenced by prior roles.

Appropriate Action:

Assurance Engagements: For assurance engagements, prior knowledge might be beneficial but still raises concerns about independence. Declining the consulting engagement due to previous responsibilities ensures objectivity.

Question 6

Which of the following activities Is most likely to require a fraud specialist to supplement the knowledge and skills of the internal audit activity?

APlanning an engagement of the area in which fraud is suspected.

BEmploying audit tests to detect fraud

CInterrogating a suspected fraudster.

DCompleting a process review to improve controls to prevent fraud.

Answer : C

Specialized Knowledge: Interrogating a suspected fraudster requires specialized knowledge and skills that go beyond the typical expertise of internal auditors. This includes understanding interrogation techniques, legal implications, and psychological aspects.

Fraud Specialist: A fraud specialist is trained in conducting investigations, including interrogations, and can provide valuable insights and evidence in cases of suspected fraud.

IIA Standards: According to Standard 1210.A2, internal auditors must have sufficient knowledge to evaluate the risk of fraud and the manner in which it is managed by the organization but are not expected to have the expertise of a person whose primary responsibility is detecting and investigating fraud.

Collaborative Approach:

Fraud Investigations: Engaging a fraud specialist ensures that the investigation is conducted thoroughly and professionally, adhering to legal and ethical standards.

Support to Internal Audit: The fraud specialist can provide support and guidance to the internal audit activity, enhancing the overall effectiveness of the fraud investigation.

Reference:

Employing a fraud specialist to interrogate a suspected fraudster ensures that the investigation is handled with the necessary expertise and legal compliance, thereby increasing the chances of uncovering the truth and taking appropriate actions.

Question 7

At a conference an internal auditor presented a new computer-assisted audit technique developed by his organization The presentation included sample data derived from performing audit engagements for the organization. Travel costs were paid by the conference organizers and the trip was approved by the chief audit executive (CAE). However, neither management nor the CAE was aware that the internal auditor would be making a presentation based on work completed for the organization According to IIA guidance, which of the following statements is most relevant regarding the actions of the auditor?

AThe auditor did not violate the standard of objectivity because the presentation had no impact on the organization.

BThe auditor violated the principle of confidentiality by disclosing information about the organization without approval.

CThe auditor should have obtained permission before using the material, but did not violate the IIA Code of Ethics or Standards

DThe auditor breached the conflict of interest standard by accepting payment for travel costs

Answer : B

Understanding Confidentiality: According to the IIA Code of Ethics, internal auditors are required to respect the value and ownership of information they receive and not disclose information without appropriate authority unless there is a legal or professional obligation to do so.

Presentation Details: In this scenario, the internal auditor presented sample data derived from audit engagements performed for the organization. Even though the travel costs were covered by the conference organizers and the trip was approved by the CAE, neither the CAE nor management was aware of the specific content of the presentation.

Violation of Confidentiality: By disclosing information related to the organization's audit engagements without prior approval from management or the CAE, the auditor breached the confidentiality principle. The auditor should have sought permission before using and presenting any material related to the organization's internal operations.

IIA Standards: Standard 1310 -- Requirements of the Quality Assurance and Improvement Program -- states that internal auditors must adhere to the IIA's Code of Ethics and Standards. This includes maintaining confidentiality and obtaining necessary approvals before disclosing any organizational information.

Reference:

The principle of confidentiality is clearly violated when information is shared without proper authorization, regardless of the perceived impact on the organization. The IIA Code of Ethics emphasizes the importance of obtaining appropriate permissions to prevent unauthorized disclosures.

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