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Q121. For a bank handling large amounts of cash, which of the following types of control would be the most effective to use?
A. Detective controls.
B. Corrective controls.
C. Preventive controls.
D. Directive controls.
Answer: C
Q122. Sometimes, internal audit staff may partner with operating managers to rank risks. Which of the following outcomes may be the most beneficial aspects of this strategy?
1.
Reappraising risks levels.
2.
Providing accurate information to management.
3.
Marketing the internal audit activity.
4.
Planning safeguards for assets in high-risk areas.
A. 1 and 2.
B. 1 and 3.
C. 2 and 3.
D. 3 and 4.
Answer: B
Q123. Which of the following methods is not valid for completing continuing professional education hours?
A. Attending technical session meetings held by state auditing organizations.
B. Completing all audit engagements in accordance with the Standards.
C. Publishing an article on the organization's internal audit department.
D. Participating in a formal in-house training program.
Answer: B
Q124. Which of the following might alert an internal auditor to the possibility of fraud in a division?
1.
The division is not scheduled for an external audit this year.
2.
Sales have increased by 10 percent.
3.
A significant portion of management's compensation is directly tied to reported net income of the division.
A. 1 only
B. 3 only
C. 1 and 2 only
D. 1,2,and 3
Answer: B
Q125. Which type of objectives can best be described as broad goals that promote the effective and efficient use of resources?
A. Strategic objectives.
B. Operational objectives.
C. Reporting objectives.
D. Compliance objectives.
Answer: B
Q126. The work papers for an audit of hazardous-materials handling and disposal at an engineering research facility provide evidence that the following procedures were performed.
- Drums of hazardous waste not yet shipped off-site were inventoried. The physical count agreed with the company's inventory records.
- A sample of hazardous-waste shipments received at the disposal site was compared to bills of lading and company records. No errors were detected.
- The audit staff observed engineering personnel during the handling of hazardous materials. No company policy violations were noted.
The reconciliation of waste drums to the inventory records provides evidence that:
A. Hazardous-waste materials were being disposed of as prescribed by company policy.
B. The amount of hazardous materials being used was accurately recorded.
C. Records of drums shipped to the waste disposal site were being maintained.
D. All hazardous-waste drums in inventory were accounted for.
Answer: D
Q127. A code of business conduct provides?
A. A fraud avoidance plan that does not explicitly describe punishments for violations.
B. A passive method of fraud deterrence.
C. A program to anonymously report irregularities to authorities.
D. An alternative to "tone at the top" programs.
Answer: B
Q128. Which of the following risk management activities is most appropriate for an internal auditor to undertake?
A. Impose risk management processes.
B. Coordinate risk management activities.
C. Implement risk responses on management's behalf.
D. Review the management of key risks.
Answer: D
Q129. The chief audit executive (CAE) of a mid-sized pharmaceutical organization has operational responsibility for the regulatory compliance function. The audit committee requests an assessment of regulatory compliance. According to IIA guidance, which of the following is the CAE's best course of action?
A. Have a proficient internal audit staff member perform the assessment and disclose the impairment in the audit report and to the board.
B. Have a regulatory compliance staff member perform a self-assessment,to be reviewed by a proficient internal auditor.
C. Have a proficient internal audit staff member perform the audit and report the results of the assessment directly to senior management and the board.
D. Contract with a third-party entity or external auditor to complete the assessment and report the results to senior management and the board.
Answer: D
Q130. An internal audit activity (IAA) provided assurance services for an activity it was responsible for during the preceding year.
As a result, which IIA Code of Ethics principle is presumed to be impaired?
A. Competence.
B. Flexibility.
C. Objectivity.
D. Independence.
Answer: C
Q131. Which of the following activities best reflects the scope and status of the internal audit activity as defined in the internal audit policy statement?
A. The internal auditor reviews the physical access to merchandise during an inventory count.
B. The audit manager conducts an internal quality assessment of the internal audit activity’s adherence to the Standards.
C. The audit manager refrains from assigning an auditor who was a former payroll clerk to conduct a payroll audit.
D. The board approves the annual performance evaluation of the chief audit executive.
Answer: A
Q132. In addition to data protection, which of the following is a control that is typically used by companies to safeguard the privacy rights of their customers?
I. End-user computing.
II. Encryption of data.
III. Spyware.
IV.
Intrusion detection.
A.
IIonly
B.
I and IIIonly C. II and IVonly D. I,II,and IVonly
Answer: C
Q133. Which of the following is a second line of defense in effective risk management and control?
A. Purchasing department.
B. Compliance department.
C. Credit department.
D. Internal audit department.
Answer: B
Q134. The audit committee has asked the chief audit executive (CAE) to assist in the selection of a new external audit firm. Which of the following is an appropriate action by the CAE?
A. The CAE and two managers from the audit staff review the bids and select one firm to meet with the audit committee for the committee's approval.
B. The CAE develops a formal set of criteria for the audit committee to use in selecting the external auditor.
C. The CAE,chief financial officer,and controller review the bids,interview two firms,and recommend one of the two firms to the audit committee for its approval.
D. The CAE declines to participate in the process because providing this assistance would result in compromising the internal audit activity's objectivity.
Answer: B
Q135. In assessing the independence of the internal audit activity, a member of a peer review team should consider all of the following factors except:
A. Access to and frequency of communications with the board of directors or its audit committee.
B. The criteria of education and experience considered necessary when filling vacant positions on the audit staff.
C. The degree to which auditors assume operating responsibilities.
D. The scope and depth of engagement objectives for the audit engagements included in the review.
Answer: B