IIA-CIA-Part1 - Certified Internal Auditor - Part 1, The Internal Audit Activitys Role in Governance, Risk, and Control

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1 IIA-CIA-Part1 - Certified Internal Auditor - Part 1, The Internal Audit Activitys Role in Governance, Risk, and Control

2 1. In order to save time, an audit manager no longer required that a standard internal control questionnaire be completed for each audit engagement. Does this represent a violation of the Standards? A. Yes,because internal control should be evaluated on every engagement and the internal control questionnaire is the mandated approach to evaluate controls. B. Yes,because internal control should be evaluated on every engagement and the internal control questionnaire is the most efficient method to do so. C. No,because auditors may omit necessary procedures if there is a time constraint,based on audit judgment. D. No,because auditors are not required to complete internal control questionnaires on every engagement. 2. The primary reason that a bank would maintain a separate compliance function is to: A. Better manage perceived high risks. B. Strengthen controls over the bank's investments. C. Ensure the independence of line and senior management. D. Better respond to shareholder expectations. Answer: A 3. Which of the following would be the most useful in developing an annual audit plan? A. General purpose audit software. B. Voting software and hardware. C. Flowcharting and data capture software. D. Risk assessment software. 4. Which of the following is not an appropriate control related to sales in a manufacturing company? A. Customers' orders are recorded promptly. B. Goods shipped are matched with valid customer orders. C. Goods returned are inspected for damage by the sales department and then entered into inventory.

3 D. Credit department approval is required for credit sales transactions. Answer: C 5. Inadequate risk assessment would have the strongest negative impact in which of the following phases of an audit engagement? A. Determining the scope. B. Reviewing internal controls. C. Testing. D. Evaluating findings. Answer: A 6. In order to exercise due professional care as defined in the International Professional Practices Framework, an internal auditor should: I. Consider the probability of significant noncompliance in each audit engagement. II. Perform assurance procedures with sufficient care to ensure that all risks are identified. III. Weigh the cost of assurance against the benefits. A. I and IIonly B. I and IIIonly C. II and IIIonly D. I,II,and III. Answer: B 7. In developing an appropriate work program for an audit engagement, the most important factor for an audit supervisor to consider is the: A. Availability of records and data. B. Potential impact of risks. C. Capabilities of audit personnel. D. Time required to complete the engagement. Answer: B

4 8. Organizations that use a highly structured command-and-control management approach are at greater risk of: A. Delayed response due to the inability to reach consensus among decision makers. B. Negative consequences that result from lower-level staff's unwillingness to confront errors by superiors. C. Erosion of staff morale due to perceptions of ineffective leadership. D. Waste and abuse of organizational resources resulting from management override of controls. Answer: B 9. In order to provide the most useful information for an organization's risk management decisions, which of the following should be assessed? A. Risk levels for future events based on the degree of uncertainty of those events and their cost of mitigation. B. Inherent and control risks and their impact on the extent of financial misstatements. C. Risk levels of current and future events,their effect on the achievement of the organization's objectives,and their underlying causes. D. Risk levels of current and future events,their impact on the organization's mission,and the potential for the elimination of existing risk factors. Answer: C 10. Which of the following represents the most effective governance structure? I. Operating Executive Internal Management Management Auditing Responsibility for risk Oversight role Advisory role II. Oversight role Responsibility for risk Advisory role III. Responsibility for risk Advisory role Oversight role IV. Oversight role Advisory role Responsibility for risk

5 A. I Only B. II C. III D. IV Answer: A 11. Which of the following represents the correct order of the risk management process? A. Resource allocation,risk management metrics,risk assessment,post-mortem analysis,effective communication. B. Risk management metrics,resource allocation,risk assessment,effective communication,post- mortem analysis. C. Risk assessment,resource allocation,risk governance and reporting,post-mortem analysis,feedback. D. Resource allocation,risk monitoring,risk assessment,feedback,post-mortem analysis. Answer: C 12. Which of the following is a role of the board of directors in the governance process? A. Conduct periodic assessments of the organization's governance systems. B. Obtain assurance concerning the effectiveness of the organization's governance systems. C. Implement an effective system of internal controls to support the organization's governance systems. D. Review and approve operational goals and objectives. Answer: B 13. Which is the least effective form of risk management? A. Systems-based preventive control. B. People-based preventive control. C. Systems-based detective control. D. People-based detective control.

6 14. Which of the following should be incorporated in a risk management policy? I. Boundaries and limit structures. II. Requirements for reporting risk. III. Risk authorities. A. I and IIonly B. I and IIIonly C. II and IIIonly D. I,II,and III. 15. In an assurance engagement of treasury operations, an internal auditor is required to consider all of the following issues except: A. The audit committee has requested assurance on the treasury department's compliance with a new policy on the use of financial instruments. B. Treasury management has not instituted any risk management policies. C. Due to the recent sale of a division,the amount of cash and marketable securities managed by the treasury department has increased by 350 percent. D. The external auditors have indicated some difficulties in obtaining account confirmations. 16. Regarding an organization's decision to retain an external audit firm, the chief audit executive (CAE) should: A. Work with the organization's chief financial officer to evaluate the external auditor's performance and together make the decision. B. Not be involved in this decision process as it would compromise the CAE's objectivity. C. Evaluate the external auditor's performance and retain the external auditor if quality and cost criteria are met. D. Assist the audit committee by facilitating the development of an appropriate evaluation process. 17. Which of the following would provide the most reliable information on the risk associated with an auditable

7 activity? A. Event scenarios with regression analysis. B. Past audit findings and instances of management failures. C. Consequences and economic predictability of loss. D. Management assessment and corroboration by the internal audit activity. 18. At the beginning of fieldwork in an audit of investments, an internal auditor noted that the interest rate had declined significantly since the engagement work program was created. The auditor should: A. Proceed with the existing program since this was the original scope of work that was approved. B. Modify the audit program and proceed with the engagement. C. Consult with management to verify the interest rate change and proceed with the engagement. D. Determine the effect of the interest rate change and whether the program should be modified. 19. In publicly held companies, management often requires the internal audit activity's involvement with quarterly financial statements that are made public and used internally. Which of the following is generally not a reason for such involvement? A. Management may be concerned about its reputation in the financial markets. B. Management may be concerned about potential penalties that could occur if quarterly financial statements are misstated. C. The Standards state that internal auditors should be involved with reviewing quarterly financial statements. D. Management may perceive that having quarterly financial information examined by the internal auditors enhances its value for internal decision making. Answer: C 20. Overall audit efficiency is enhanced between the internal and external audit functions when: A. Internal audit coverage is reduced to avoid potential conflicts of interest. B. Audits of the same department are conducted at different times. C. The internal audit department reviews functions or departments prior to the external audit.

8 D. External audit scope is reduced based on the internal audit department's activities.

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TestKing.IIA-CIA-Part1.566Q Number: IIA-CIA-Part1 Passing Score: 800 Time Limit: 120 min File Version: 7.2 http://www.gratisexam.com/ IIA-CIA-Part1 Certified Internal Auditor - Part 1, The Internal Audit