IIA-CIA-PART1 Online Practice Questions and Answers

A high-volume retailer of consumer goods has used point-of-sale data to record sales and update inventory records for several years. When price changes are scheduled, corporate headquarters downloads a price change file to a computer server system at each store. Each store's assistant manager is responsible for checking the server for downloads and running the program that updates the store's price file at the authorized price update time. In comparison with having headquarters initiate the price update centrally, this approach to price updating will most likely:

A. Decrease the risk that customers will be undercharged consistently for sales items.

B. Decrease the risk that item prices will sometimes be inaccurate.

C. Increase the risk that customers will be undercharged consistently for sales items.

D. Increase the risk that item prices will sometimes be inaccurate.

A chief audit executive (CAE) for a specialty retailer is asked by management to review the controls in place to manage their electronic funds transfer process. The internal audit activity has no experience with similar engagements. What is the most appropriate course of action for the CAE to take?

A. Plan the engagement and begin fieldwork using existing staff.

B. Attempt to discourage management from the request.

C. Hire an outside consulting firm to assist with the engagement.

D. Defer the audit until current staff can be appropriately trained.

Which of the following audit findings would have the least impact (either positive or negative) on a department's control environment?

A. The department makes long-term investment risk decisions to maximize return on investment.

B. The department manager sets and demonstrates a tone of honesty and integrity in all business dealings.

C. Many department functions are duplicated or verified by other department employees.

D. Deficiencies were found in the appropriate authorization of transactions.

Risk within an internal audit engagement is defined as the:

A. Probability that a balance or class of transactions and related assertions contain misstatements that could be material to the financial statements.

B. Uncertainty of an event occurring that could have an impact on the achievement of objectives.

C. Failure to adhere to organizational policies, plans, and procedures, or the failure to comply with relevant laws and regulations.

D. Failure to accomplish established objectives and goals for operations or programs.

Once the cause of a problem has been identified, the next step is to:

A. Select a solution.

B. Generate alternative solutions.

C. Identify the problem.

D. Consider the reaction of competitors to various courses of action.

An internal auditor is preparing a draft observation based on her assessment of an accounts payable process. Which of the following is a process recommendation?

A. Authorization policy for accounts payable was not followed for payments above $10, 000.

B. Authorization policy requires two levels of approval for all payments above $10, 000.

C. Because of non-compliance with authorization policy, inappropriate payments may be made for payments above $10, 000.

D. The accounts payable authorization actions for all payments should be automated.

Which of the following controls is not appropriate for sales in a manufacturing organization?

A. Customers' orders are recorded promptly.

B. Goods shipped are matched with valid customer orders.

C. Goods returned are inspected for damage by the receiving department for proper disposition.

D. Sales department approval is required for credit sales transactions.

According to the IIA guidance, who is responsible for periodically assessing the internal audit activity?

A. The board.

B. The chief audit executive.

C. Senior management.

D. The external auditors.

If an engagement client disputes that a specific action or process is within the scope of the internal audit activity, what would be the most appropriate way for the internal audit activity (IAA) to respond?

A. Terminate the audit engagement in full because an operational audit will not be productive without the client's cooperation.

B. Terminate only the specific action or process with which the client disagrees and work to determine a substitute function that will not impede further IAA or the client-audit relationship.

C. Refer the client to the IAA's charter and the approved yearly audit plan, which includes the areas designated for audit in the current time period.

D. Seek the approval of senior management or the board in mediation, allowing an overseer to clarify the scope of the audit engagement for the client.

An internal auditor is reviewing employee travel data to identify opportunities to cut costs while ensuring adequate participation at conferences to support the organization's mission. Which of the following pieces of evidence would be sufficient for completing this task?

A. A log from the last year that includes dates of travel, conference titles, and conference objectives, all of which correspond with employee names and costs per trip.

B. A log that includes titles of conferences that all employees were invited to attend in the last year, along with the dates of those conferences and average costs per traveler.

C. A log of conferences titles, dates of travel for each employee, and a detailed summary of conference objectives and how they relate to the organization's mission needs.

D. A log of employee travel requests, which include the title of each conference, the conference objectives, anticipated dates of travel, and estimated costs.