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Q241. 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.
Answer: D
Q242. 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.
Answer: D
Q243. The best reason for separating the cash-receiving function from the related record-keeping function is to:
A. Segregate cash payments from cash receipts.
B. Provide accountability for cash received.
C. Minimize misappropriations in cash receipts.
D. Improve physical security over the cash-receiving function.
Answer: C
Q244. Which of the following statements is correct regarding corporate compensation systems and related bonuses?
I. A bonus system should be considered part of the control environment of an organization and should be considered in formulating a report on internal control.
II. Compensation systems are not part of an organization's control system and should not be reported as such.
III.
An audit of an organization's compensation system should be performed independently of an audit of the control system over other functions that impact corporate bonuses.
A.
Ionly
B.
IIonly
C.
IIIonly
D.
II and IIIonly
Answer: A
Q245. Which of the following actions by the internal audit activity provides strong evidence that it is organizationally independent?
A. It reviews engagement results for evidence of undue influence before releasing the final report.
B. It requires all internal audit staff to sign annual non-disclosure and potential conflict of interest statements.
C. It maintains direct interactions with the audit committee or board.
D. It releases an approved internal audit charter stating that the internal audit activity is independent.
Answer: C
Q246. During an internal audit, the internal auditor compares the employee turnover rate in the area being audited with the employee turnover rate in the organization as a whole.
This is an example of which of the following analytical auditing procedures?
A. Reasonableness test.
B. Regression analysis.
C. Benchmarking.
D. Trend analysis.
Answer: C
Q247. An organization's chief audit executive (CAE) has been asked to monitor and report on any violations of the organization's code of conduct. The CAE should:
A. Review and adjudicate all complaints.
B. Lead the committee responsible for the oversight of the code.
C. Develop specific procedures to ensure that the code is clearly communicated to all employees.
D. Participate in an advisory capacity on the committee that adjudicates any violations.
Answer: D
Q248. An internal auditor is assigned to conduct an audit of security for a local area network (LAN) in the finance department of the organization. Investment decisions, including the use of hedging strategies and financial derivatives, use data and financial models which run on the LAN. The LAN is also used to download data from the mainframe to assist in decisions. Which of the following should be considered outside the scope of this security audit engagement?
A. Investigation of the physical security over access to the components of the LAN.
B. The ability of the LAN application to identify data items at the field or record level and implement user access security at that level.
C. Interviews with users to determine their assessment of the level of security in the system and the vulnerability of the system to compromise.
D. The level of security of other LANs in the company which also utilize sensitive data.
Answer: D
Q249. An internal auditor would like to identify the involvement of various organizational units in handling employee travel reimbursement claims. Which of the following methods would be most effective and efficient in completing this task?
A. Process mapping.
B. Interviewing.
C. Monitoring.
D. Distributing questionnaires.
Answer: A
Q250. Human resources and payroll are separate departments. Which of the following combinations would provide the best segregation of duties?
A. Human resources personnel add employees,payroll personnel process hours,and human resources personnel deliver paychecks to employees.
B. Human resources personnel add employees,review and submit payroll hours to the payroll department for processing,and deliver paychecks to employees.
C. Human resources personnel add employees,and payroll personnel process hours and enter employee bank account numbers. Paychecks are automatically deposited in the employee's bank account.
D. Payroll personnel add employees and enter employee bank account numbers but process hours only as approved by the human resources department. Paychecks are automatically deposited in the employee's bank account.
Answer: C
Q251. wo individuals are being considered for an audit team that is to perform a
highly technical review.
Which of the following situations would preclude selection of the individual for the audit due to an objectivity concern?
I. Person A is a member of the internal audit staff and has the required technical skills. Person A participated in a controls review of the system to be audited when it was being developed.
II.
Person B is a technical specialist who understands the audit area but is not a member of the internal audit staff. Although person B has personal credibility in the information systems department to be audited, person B works for another department in the organization.
A.
Ionly
B.
IIonly
C.
Both I and II.
D.
Neither I nor II.
Answer: D
Q252. Which of the following best describes the underlying premise of the COSO enterprise risk management framework?
A. Management should set objectives before assessing risk.
B. Every entity exists to provide value for its stakeholders.
C. Policies are established to ensure that risk responses are performed effectively.
D. Enterprise risk management can minimize the impact and likelihood of unanticipated events.
Answer: B
Q253. An internal auditor is gathering evidence for an organization's internal audit engagement and requests a sample of vendor invoices from the organization. Which of the following is true regarding the reliability of this evidence?
A. The invoices have zero reliability.
B. The invoices have low reliability.
C. The invoices have medium reliability.
D. The invoices have high reliability.
Answer: C
Q254. All of the following would normally be involved in preparing for and carrying out the internal audit activity's annual plan except:
A. Establishing policies and procedures for workpapers and referencing.
B. Providing periodic activity reports to the audit committee on audit engagements in progress.
C. Assessing the amount of risk in major departments.
D. Training audit staff on appropriate audit methodologies for addressing any newly identified risks.
Answer: A
Q255. According to the International Professional Practices Framework, a review team must express an opinion on which of the following when performing an external assessment of an internal audit activity?
I. Conformance with the Standards and IIA Code of Ethics.
II. Effectiveness of continuous improvement activities.
III. Feedback from internal audit customers and other stakeholder groups.
IV.
Efficiency and effectiveness of the internal audit activity's administration processes.
A.
Ionly
B.
IIIonly
C.
I and IIonly
D.
II and IVonly
Answer: A