IIA-CHAL-QISA Qualified Info Systems Auditor CIA Challenge Exam Practice Test

Answer : B

Identify the Conflict of Interest: The internal auditor learns about a large loan made to another auditor's relative, which represents a conflict of interest.

Refer to Professional Standards: According to the Institute of Internal Auditors' (IIA) standards, an internal auditor must maintain objectivity and avoid conflicts of interest (IIA Standard 1100 -- Independence and Objectivity).

Escalate the Issue: The appropriate course of action is to escalate this matter to the chief audit executive (CAE) and management, as they are responsible for determining the impact of the conflict and the appropriate response.

Decision Making: The CAE and management will assess whether the conflict of interest could impair the auditor's objectivity and decide whether the auditor should be removed from the engagement or if additional oversight is needed.

Documentation: It is important to document the conflict and the decision-making process in the audit documentation for transparency and accountability.

The IIA's International Standards for the Professional Practice of Internal Auditing, specifically Standard 1100 on Independence and Objectivity.

Answer : C

Directive controls are designed to encourage desired behavior or outcomes.

Option A: Segregation of duties is a preventive control, not a directive control.

Option B: Exception reports are detective controls.

Option D: Supervisory review is also a preventive or detective control.

Option C: Training programs are directive controls as they guide employees on the correct procedures and practices to follow.

Answer : D

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.

Answer : A

The statistical model indicates that daily sales have a direct relationship with the cost of ingredients used and an inverse relationship with rainy days.

Option A: On a rainy day, if total sales are greater than expected compared to the cost of ingredients used, it may indicate discrepancies that could be a sign of employee theft. For instance, if ingredients are used but not reflected in the sales, it suggests that items might be missing (stolen).

Option B: On a sunny day, lower-than-expected sales compared to the cost of ingredients could indicate wastage but not necessarily theft.

Option C and D: Both scenarios where total sales and the cost of ingredients are higher or lower than expected do not specifically point to theft without additional context.

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.

Answer : A

The statistical model indicates that daily sales have a direct relationship with the cost of ingredients used and an inverse relationship with rainy days.

Option A: On a rainy day, if total sales are greater than expected compared to the cost of ingredients used, it may indicate discrepancies that could be a sign of employee theft. For instance, if ingredients are used but not reflected in the sales, it suggests that items might be missing (stolen).

Option B: On a sunny day, lower-than-expected sales compared to the cost of ingredients could indicate wastage but not necessarily theft.

Option C and D: Both scenarios where total sales and the cost of ingredients are higher or lower than expected do not specifically point to theft without additional context.

Answer : B

Ensuring Quality: To ensure the quality of the consulting engagement in the human resources department, the chief audit executive (CAE) can implement a fieldwork peer review process. This involves having experienced auditors review the work of their colleagues to ensure adherence to audit standards and procedures.

Efficiency and Effectiveness:

Peer Review: This method helps identify any issues or improvements needed in real-time, enhancing both the efficiency and effectiveness of the audit process.

Standardized Work Programs: While standardized work programs (option C) provide consistency, peer review adds a layer of quality assurance.

Supervision: Personal supervision by the CAE (option D) is not practical for ensuring the quality of all engagements.