IIA-CIA-Part1 Exam Practice Test Instant Access

Question 1

According to IIA guidance, which of the following would be the most appropriate to help a new internal auditor understand the nature and positioning of the internal audit activity within his organization?

AThe internal audit charter.

BExamples of internal audit reports.

CThe internal audit policy and procedures manual.

DThe IIA's International Professional Practices Framework.

Answer : A

The internal audit charter provides a formal definition of the internal audit activity's purpose, authority, and responsibility. It is foundational for helping new auditors understand their role and how internal audit functions within the organization.

Question 2

According to IIA guidance, which of the following statements regarding ethics is true?

ABusiness ethics may vary within an organization with both domestic and foreign operations.

BBusiness ethics are universal in nature and organizations across the world are expected to comply with similar standards.

CA business ethics policy for an organization is established solely to direct the behavior and expectations of employees.

DBusiness ethics of an organization must remain independent from those of suppliers, customers, and business partners.

Answer : A

Business ethics can vary within organizations that operate across multiple regions, as they must often consider local cultural norms and regulations. The IIA recognizes the need for flexibility in ethical policies for multinational organizations, while still adhering to fundamental ethical principles.

Question 3

Which of the following best describes a consulting engagement rather than an assurance engagement?

ABank internal auditors review an activity checklist to determine that the loan officer followed proper procedures.

BThe chief financial officer asks for the internal auditor's opinion regarding whether the new accounting pronouncements were properly and comprehensively adopted.

CAn internal auditor is assigned to assess whether a proposed new initiative to convert a customer service system would be cost-effective.

DSenior management asks the internal audit activity to review compliance with customer data security regulations.

Answer : B

Consulting engagements often involve providing advice or opinions at management's request. In this case, providing input on the accounting pronouncements falls under a consulting capacity, consistent with IIA definitions of consulting services.

Question 4

For a high-risk observation, which is the best approach to follow when management takes an aggressive, uncompromising position in opposition to the internal audit activity?

AThe parties should work together to develop a mutually beneficial solution.

BThe internal audit activity should share the observation with other business units to get their opinions.

CThe internal audit activity should discuss with senior management, and if still not resolved, discuss with the board.

DThe internal audit activity should accommodate management's position, since the relationship is more important than the fight.

Answer : C

Escalating unresolved high-risk issues to senior management and the board is in line with IIA guidance, which underscores the importance of ensuring that significant audit findings are addressed appropriately to protect the organization's interests.

Question 5

A sales manager was recently bypassed for a promotion. He feels entitled to a higher salary and is angry that management does not recognize his contributions. To make up for this perceived injustice, he begins to record false expenses on his travel expense reports. This scenario best illustrates which of the following fraud risk factors?

AIncentive.

BRationalization.

CPressure.

DOpportunity.

Answer : B

Rationalization is evident here, as the manager justifies his fraudulent actions by viewing them as compensation for perceived unfair treatment. According to IIA guidance on fraud, rationalization allows individuals to reconcile unethical behavior with their self-concept.

Question 6

A new internal auditor was recently recruited to the internal audit activity from the organization's finance department. What is likely to be the chief audit executive's greatest concern regarding assigning the new auditor to upcoming audits in the finance department?

AThe time it may take the new auditor to complete the assignment and report the findings to management.

BThe qualifications of the new auditor and whether the auditor's business knowledge is relevant to the assignment.

CThe potential for a conflict of interest to exist or appear to exist if the new auditor undertakes these assignments.

DThe knowledge the new auditor may have of control weaknesses in the finance department.

Answer : C

The IIA emphasizes the need for internal auditors to maintain independence and avoid situations that might impair objectivity. Assigning a recent finance employee to audit finance-related activities may lead to actual or perceived conflicts of interest, compromising the integrity of the audit findings.

Question 7

Nine months ago, an employee who was responsible for collections in the accounts receivables department joined the internal audit team. There is an accounts receivables assurance audit scheduled as part of this year's approved audit plan, which will include a review of the collections unit. With the knowledge and experience of this individual in the area, which of the following is the best approach for the chief audit executive (CAE) to take?

AHave the auditor formerly with the collections unit assist with planning and documenting the audit field work.

BHave the auditor formerly with the collections unit not participate on the audit team.

CHave the auditor formerly with the collections unit conduct the fieldwork and ensure it is reviewed by the CAE.

DHave the auditor formerly with the collections unit review all fieldwork done to ensure that there was adequate coverage.

Answer : B

According to IIA standards, assigning an auditor to review an area where they previously had responsibilities may compromise objectivity. The best approach is for the auditor to abstain from participation in the audit of the collections unit to avoid any perceived conflicts.

IIA-CIA-Part1 Certified Internal Auditor Exam Practice Test