Download Certified Internal Auditor - Part 1, The Internal Audit Activity's Role in Governance, Risk, and Control.IIA-CIA-Part1.BrainDumps.2018-09-26.310q.vcex
| Vendor: | IIA |
| Exam Code: | IIA-CIA-Part1 |
| Exam Name: | Certified Internal Auditor - Part 1, The Internal Audit Activity's Role in Governance, Risk, and Control |
| Date: | Sep 26, 2018 |
| File Size: | 248 KB |
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Demo Questions
Question 1
During a payroll audit of a large organization, an auditor noted that the assistant personnel director is responsible for many aspects of the computerized payroll system, including adding new employees in the system; entering direct-deposit information for employees; approving and entering all payroll changes; and providing training for system users. After discussions with the director of personnel, the auditor concluded that the director was not comfortable dealing with information technology issues and felt obliged to support all actions taken by the assistant director. The auditor should:
- Continue to follow the engagement program because the engagement scope and objectives have already been discussed with management.
- Review the engagement program to ensure testing of direct deposits to employee bank accounts is adequately covered.
- Recommend to the chief audit executive that a fraud investigation be started.
- Test a sample of payroll changes to ensure that they were approved by the assistant director before being processed.
Correct answer: B
Question 2
The chief audit executive should periodically report the internal audit activity's purpose, authority, responsibility, and performance, as well as significant risk exposures and control issues, to which of the following?
I. Board of directors.
II. Senior management.
III. Shareholders.
IV. External auditors.
- II only
- I and II only
- I, II, and III only
- I, III, and IV only
Correct answer: B
Question 3
An audit to test the system of controls over the purchase, distribution, and use of radioactive material is being conducted at a company's plants. The process is well documented, and employees in the safety department are very familiar with the department's procedures. Since the purchasing and facilities departments are involved in the process, the auditor is considering reviewing their radioactive material-handling procedures as well. The auditor should:
- Have confidence in the rigorous and detailed safety department procedures, since that department has the main responsibility for radiation safety, and should not use audit time to review other departments.
- Adjust the engagement schedule and budget, if needed, and interview the appropriate individuals in the purchasing and facilities departments to ascertain whether additional controls exist that complement those identified within the safety department.
- Test the controls identified within the safety department; if results are unfavorable, the auditor should consider whether to involve the other departments.
- Defer questions regarding purchasing, facilities, and other departments until audit projects can be scheduled for those departments.
Correct answer: B
Question 4
If an engagement client's operating standards are vague and thus subject to interpretation, the auditor should:
- Seek agreement with the client as to the standards to be used to measure operating performance.
- Determine best practices in the area and use them as the standard.
- Interpret the standards in their strictest sense because standards are otherwise only minimum measures of acceptance.
- Omit any comments on standards and the client's performance in relationship to those standards, because such an analysis would be meaningless.
Correct answer: A
Explanation:
Question 5
An employee who recently transferred into the internal audit activity has been assigned to audit the accounts payable system.
Which function, if previously performed by the auditor, would represent a conflict of interest?
- Monitoring the allowance for doubtful accounts.
- Writing procedures for the handling of duplicate payments.
- Signing timekeeping cards for subordinates.
- Reviewing shipping documents for accuracy.
Correct answer: B
Question 6
Which of the following describes a control weakness?
- Purchasing procedures are well designed and are followed unless otherwise directed by the purchasing supervisor.
- Pre-numbered blank purchase orders are secured within the purchasing department.
- Normal operational purchases fall in the range from $500 to $1, 000 with two signatures required for purchases over $1, 000.
- The purchasing agent invests in a publicly traded mutual fund that lists the stock of one of the company's suppliers in its portfolio.
Correct answer: A
Question 7
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?
- Accept the assignment provided that such consulting services are defined in the charter.
- Decline the assignment because participation on task forces will impair the auditor's objectivity in future audit engagements.
- Accept the assignment if the auditor believes that it will not impair objectivity in future audit engagements.
- Do not accept the assignment because the assignment is not part of an approved audit plan.
Correct answer: A
Question 8
Senior management at a financial institution has received allegations of fraud at its derivatives trading desk and has asked the internal audit activity to investigate and issue a report concerning the allegations. The internal audit activity has not yet developed sufficient proficiency regarding derivatives trading to conduct a thorough fraud investigation in this area. Which of the following courses of action should the chief audit executive (CAE) take to comply with the Standards?
- Engage the former head of the institution's derivatives trading desk to perform the investigation and submit a report with supporting documentation to the CAE.
- Request that senior management allow a delay of the fraud investigation until the internal audit activity's on-staff certified fraud examiner is able to obtain the appropriate training regarding the analysis of derivatives trading.
- Request that senior management exclude the internal audit activity from the investigation completely and instead contract with an external certified fraud examiner with derivatives experience to perform all aspects of the investigation and subsequent reporting.
- Contract with an external certified fraud examiner with derivatives experience to perform the investigation and subsequent reporting, with the chief audit executive approving the scope of the investigation and evaluating the adequacy of the work performed.
Correct answer: D
Question 9
Which of the following corporate travel policies is least likely to be cost-effective?
- Negotiating corporate agreements with hotels, airlines, and car rental firms.
- Tracking credits for canceled airline reservations.
- Selecting the least expensive airline travel available, without regard to total travel time and distance.
- Traveling to facilities in tourist areas during the off-season when possible.
Correct answer: C
Question 10
Which of the following characteristics could indicate high risk?
- Management decisions are made by a committee of mid to higher level management personnel.
- The company is not in a rapidly growing industry.
- The company's profitability is lower than the industry norm.
- Management turnover has been very low.
Correct answer: C
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