Updated Certified Internal Auditor - Part 1, The Internal Audit Activitys Role In Governance, Risk, And Control IIA-CIA-Part1 Free Practice Test

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NEW QUESTION 1
An internal audit charter, approved by the board, restricts the internal audit activity to providing assurance only on the reliability of financial information and the effectiveness of internal accounting controls. Which of the following statements is true regarding the extent to which the external auditor may rely on the internal audit activity's work?

  • A. The external auditor may make full use of the work, as the audit charter is very specific as to the work the internal audit activity may undertake.
  • B. The external auditor may use the work, as the board has approved the charter, thus taking responsibility for any deficiencies.
  • C. The external auditor must disregard the work, as the scope of the charter may introduce bias and result in a lack of due professional care.
  • D. The external auditor may use the work with caution, due to the internal audit activity's scope and responsibility restrictions.

Answer: D

NEW QUESTION 2
A manufacturing line supervisor joins the internal audit activity for a two-year rotational job assignment and is assigned to an accounts receivable audit. With regard to this assignment, which of the following should be the primary concern of the audit manager?

  • A. Due professional care.
  • B. Individual independence.
  • C. Individual objectivity.
  • D. Organizational independence.

Answer: A

NEW QUESTION 3
The management at a national consumer goods organization implements a fair work and pay practice as well as a policy to treat employees equitably and consistently. Which common characteristics of fraud will the practice and policy most likely reduce?

  • A. Pressure or incentive.
  • B. Opportunity.
  • C. Rationalization.
  • D. Commitment.

Answer: A

NEW QUESTION 4
The manager for an organization's accounts payable department resigned her post in that capacity. Three months later, she was recruited to the internal audit activity and has been working with the audit team for the last eight months. Which of the following assignments would the newly hired internal auditor be able to execute without any impairments to independence or objectivity?

  • A. An operations audit of the accounts payable department.
  • B. A consulting engagement related to a new accounts payable optimization initiative.
  • C. A review of the employees' sports club finances, which are overseen by the chief audit executive.
  • D. An assurance review for a sales program on which she previously provided consultation.

Answer: C

NEW QUESTION 5
An IT contractor applied for an internal audit position at a bank. The contractor worked for the bank's IT security manager two years ago. If the audit manager interviewed the contractor and wants to extend a job offer, which of the following actions should the chief audit executive pursue?

  • A. Allow the audit manager to hire the contractor and state that the individual is free to perform IT audits, including security.
  • B. Not allow the audit manager to hire the contractor, as it would be a conflict of interest.
  • C. Allow the audit manager to hire the contractor, but state that the individual is not allowed to work on IT security audits for one year.
  • D. Not allow the audit manager to hire the contractor and ask the individual to apply again in one year.

Answer: A

NEW QUESTION 6
Which of the following activities is most likely to require a fraud specialist to supplement the knowledge and skills of the internal audit activity?

  • A. Planning an engagement of the area in which fraud is suspected.
  • B. Employing audit tests to detect fraud.
  • C. Interrogating a suspected fraudster.
  • D. Completing a process review to improve controls to prevent fraud.

Answer: B

NEW QUESTION 7
According to IIA guidance, which of the following is least compliant with the requirements regarding an internal auditor's need for objectivity?

  • A. An internal auditor assessed the effectiveness of controls over payroll software, which he had helped implement with a previous employer.
  • B. An internal auditor participated in an audit of controls around absenteeism, despite providing some consultation on controls in this area earlier in the year.
  • C. An internal auditor performed an assurance engagement for the effectiveness of accounts payable access controls, one of which he previously helped to design.
  • D. An internal auditor, previously employed in the quality assurance operations area, performed a consulting engagement for the operations manager.

Answer: C

NEW QUESTION 8
According to IIA guidance, which of the following external groups is most likely to represent a liability risk, based on activities associated with the organization's corporate social responsibility program?

  • A. Consumers.
  • B. Activists.
  • C. Suppliers.
  • D. Investors.

Answer: B

NEW QUESTION 9
Which of the following is most likely to enhance an internal auditor's objectivity?

  • A. An auditor is appropriately able to communicate results.
  • B. An auditor performs his work free from interference.
  • C. An auditor is unrestricted in determination of scope.
  • D. An auditor avoids conflicts of interest.

Answer: D

NEW QUESTION 10
Which of the following scenarios best illustrates a rationalization as the root cause of potential fraud?

  • A. Managers who have been with the organization for several decades become aware that newly hired, younger managers are being moved more quickly into senior positions.
  • B. The controller at a nationwide manufacturing company recently opted to no longer require two-week mandatory vacations for accounting staff.
  • C. Security cameras that monitor cash handling at the register are not functioning.
  • D. The organization is slowly phasing out three mature products that produce the highest commissions for the sales staff.

Answer: B

NEW QUESTION 11
Which of the following is a requirement for an assurance engagement that may not be for a consulting engagement?

  • A. The internal audit activity has to ensure team members' objectivity is not impaired.
  • B. Auditors cannot participate in an assurance engagement of a function for which they previously performed a consulting engagement.
  • C. The scope and objective of the engagement is agreed upon based on the engagement client's needs.
  • D. The internal audit activity must ensure management actions have been implemented effectively or risk accepted.

Answer: B

NEW QUESTION 12
According to IIA guidance, which of the following practices by the chief audit executive (CAE) best enhances the organizational independence of the internal audit activity?

  • A. CAE reviews and approves the annual audit plan.
  • B. CAE meets privately with The CEO at least annually.
  • C. CAE meets privately with The board at least annually.
  • D. CAE reports to the board regarding audit staff performance evaluation and compensation.

Answer: D

NEW QUESTION 13
In which of the following scenarios would the chief audit executive (CAE) be required to decline the assignment?

  • A. The CAE would need to procure external services to deliver the internal audit assurance program.
  • B. There is no expertise within the internal audit team for detecting and investigating fraud.
  • C. There is no expertise within the internal audit team for auditing an IT engagement.
  • D. There is no available expertise on the internal audit team to perform a consulting engagement.

Answer: B

NEW QUESTION 14
Which of the following is an example of collusion?

  • A. An employee includes a faked receipt in his expense claim, and the claim is signed by the employee's manager.
  • B. A vendor inflates the price of an item and remits a portion of the excess to the purchasing manager.
  • C. A vendor sends a duplicate invoice with a new invoice number, and the accounts payable system fails to detect the duplication.
  • D. An employee works with the IT manager to develop a program for identifying duplicate invoice payments.

Answer: B

NEW QUESTION 15
Which of the following options is the most cost-effective and efficient way for internal auditors to keep current with the latest developments in the internal audit profession?

  • A. Attending annual professional conferences and seminars.
  • B. Participating in on-the-job training in various departments of the organization.
  • C. Pursuing as many professional certifications as possible.
  • D. Maintaining membership in The HA and similar professional organizations and subscribing to relevant email updates or news feeds.

Answer: D

NEW QUESTION 16
Which of the following is true regarding the use of a formal risk management framework?
* 1. It facilitates a methodical approach to risk mitigation.
* 2. It defines and standardizes the terminology used in risk communication.
* 3. It establishes the risk tolerance levels to be accommodated in the strategy.
* 4. It facilitates the alignment of risk mitigation strategies with management priorities.

  • A. 1.2, and 3.
  • B. 1,2, and 4.
  • C. 1.3, and 4.
  • D. 2. 3, and 4.

Answer: B

NEW QUESTION 17
Which of the following items should the chief audit executive disclose to senior management regarding the results of the internal audit activity's quality assessments?

  • A. The internal audit activity's plan for resource allocation.
  • B. The amount of the organization's potential loss prevented by the risk-based auditing of the internal audit activity.
  • C. The number of audits from the annual internal audit plan that were completed last year.
  • D. The qualifications and independence of the assessment Team.

Answer: B

NEW QUESTION 18
According to IIA guidance, which of the following statements is true regarding periodic internal assessments of the internal audit activity?

  • A. Internal assessments are conducted to benchmark the internal audit activity's performance againstindustry best practices.
  • B. Internal assessments must be performed at least once every five years by a qualified assessor.
  • C. An internal auditor may perform a peer review of a colleague's workpapers, as long as the auditor wasn't involved in the audit under review.
  • D. Follow-up to ensure appropriate improvements are implemented is a recommended, but not mandatory, element of internal assessments.

Answer: C

NEW QUESTION 19
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