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NEW QUESTION # 303
How should management obtain assurance that employees are complying with the organization's security policy?
- A. Regularly conduct independent reviews of employees' security practices.
- B. Enforce a policy that requires all employees to sign a statement that they will adhere to the organization's security policies.
- C. Rely on exception reports to identify errors.
- D. Routinely survey staff so that information related to security practices can be submitted anonymously.
Answer: A
NEW QUESTION # 304
Which of the following should play a leading role in overseeing ihe ethical atmosphere of an organization?
- A. Board of directors.
- B. Internal audit activity.
- C. Operating management.
- D. Senior management.
Answer: A
Explanation:
The board of directors plays a leading role in overseeing the ethical atmosphere of an organization. They are responsible for establishing and promoting the organization's values and ethical standards. The board sets the tone at the top and ensures that senior management implements policies and procedures that support ethical behavior throughout the organization. This oversight includes monitoring compliance with ethical standards and addressing any ethical issues that arise.
The IIA's International Professional Practices Framework (IPPF) - Practice Guide on Ethical Leadership.
COSO's Enterprise Risk Management - Integrating with Strategy and Performance.
NEW QUESTION # 305
According to IIA guidance, who is ultimately responsible for the enhancement of the internal auditor's knowledge, skills, and other competencies?
- A. The CEO.
- B. The chief audit executive.
- C. The officer in charge of human resources.
- D. The internal auditor.
Answer: D
Explanation:
According to the IIA's Code of Ethics, internal auditors are responsible for maintaining their knowledge, skills, and other competencies at a level required to perform their professional responsibilities. Internal auditors should also pursue relevant professional development opportunities to enhance their ability to add value to the organization. The other options may support or facilitate the development, but they are not ultimately responsible for it.
NEW QUESTION # 306
Which of the following controls within a spreadsheet would address the risk of logic errors?
1. The spreadsheet contains formulas that foot and cross-foot data.
2. The spreadsheet is locked to protect cell formulas from being inadvertently changed.
3. Spreadsheets are included in nightly backup processes.
4. Check-in and check-out software is used to manage version control.
- A. 2 and 4 only
- B. 3 and 4 only
- C. 1 and 2 only
- D. 1 and 3 only
Answer: C
Explanation:
Section: Volume D
NEW QUESTION # 307
Which of the following are appropriate responsibilities of the audit committee in relation to the chief audit executive (CAE)?
1. Approving the internal audit charter.
2. Approving decisions regarding the appointment and removal of the CAE.
3. Approving the risk management strategy for the organization.
4. Making appropriate inquiries of management and the CAE to determine whether there are inappropriate scope and resource limitations.
- A. 1, 2, and 4 only
- B. 1 and 2 only
- C. 1, 2, and 3 only
- D. 2, 3, and 4 only
Answer: A
Explanation:
Section: Volume C
NEW QUESTION # 308
Which of the following would most likely be classified as a consulting engagement?
- A. Reviewing the application controls in the human resources system
- B. Examining the internal control effectiveness of the marketing department
- C. Facilitating a self assessment of the organizations business risk and control identification
- D. Assessing the adequacy of the IT system's business process design
Answer: C
Explanation:
Facilitating a self-assessment of the organization's business risk and control identification is most likely to be classified as a consulting engagement. This type of activity involves helping the organization with advice and assistance to manage and improve its risk management, control, and governance processes, which aligns with the definition of consulting services provided by internal auditors.
Institute of Internal Auditors (IIA) - International Professional Practices Framework (IPPF)
NEW QUESTION # 309
A chief audit executive assigned an internal auditor to perform an assurance engagement. The auditor concluded with a major audit finding based on hearsay evidence Which of the following competencies did the auditor appear to be lacking?
- A. Demonstration of due professional care.
- B. Risk-based assurance knowledge
- C. Demonstration of ethical behavior
- D. Effective communication skills
Answer: A
Explanation:
If an auditor concluded a major audit finding based on hearsay evidence, it indicates a lack of demonstration of due professional care. Due professional care requires that conclusions be based on evidence that is sufficient, reliable, relevant, and useful to support audit findings and recommendations. Relying on hearsay does not meet these criteria and undermines the audit's reliability and credibility.References: IIA standards related to due professional care, which dictate that internal auditors must gather adequate factual evidence to support their findings and conclusions.
NEW QUESTION # 310
A chief audit executive (CAE) of an international charity reports functionally to the audit committee of the board of directors and administratively to the charity's chief financial officer (CFO). Which of the following would impair the internal audit function's independence?
- A. The CFO manages the accounting of the budget for the internal audit function.
- B. The CFO provides feedback on the CAE's audit reports.
- C. The CFO determines the scope of internal audit work in the accounting department.
- D. The CFO administers the annual evaluation process for the internal auditors.
Answer: C
NEW QUESTION # 311
Which of the following is a legitimate role for the internal audit activity in the organization's risk management process'?
- A. Creating and implementing new risk management processes
- B. Maintaining sole responsibility for risk management within the organization
- C. Setting the risk appetite of the organization
- D. Championing the establishment of a nsk management framework
Answer: B
NEW QUESTION # 312
With regard to governance, which of the following is a board-level responsibility rather than a management responsibility?
- A. Monitoring and measuring performance.
- B. Obtaining assurance on external financial, regulatory, and internal audits.
- C. Assigning authority and responsibilities organization wide.
- D. Complying with laws, regulations, and codes.
Answer: B
NEW QUESTION # 313
A whistle blower notified internal audit of a conflict of interest between an organization's employee and a major supplier. Which of the following steps should be undertaken first?
- A. Interview the employee identified by the whistleblower.
- B. Review all the orders issued to the supplier to investigate potential fraud.
- C. Notify senior management, the board, and the external auditor about the alleged fraud
- D. Attain an understanding of the employee's role, responsibilities, and relationship with the supplier.
Answer: D
Explanation:
The first step in addressing a notification from a whistleblower about a conflict of interest should be to gain an understanding of the employee's role, responsibilities, and relationship with the supplier. This step is critical before conducting interviews or notifying others, as it helps establish the context for the investigation, ensuring that further steps are informed and targeted effectively.References: IIA guidance on handling whistleblower claims and conducting internal investigations.
NEW QUESTION # 314
The chief audit executive (CAE) is planning to conduct an internal assessment of the internal audit activity (IAA). Part of this assessment will include benchmarking. According to IIA guidance, which of the following qualitative metrics would be appropriate for the CAE to use?
1. Average client customer satisfaction score for a given year.
2. Client survey comments on how to improve the IAA.
3. Auditor interviews once an audit has been completed.
4. Percentage of audits completed within 90 days.
- A. 2 and 3.
- B. 3 and 4.
- C. 1 and 2.
- D. 1 and 3.
Answer: A
NEW QUESTION # 315
Guidelines need to be set for various levels of suspected fraud within an organization and when it would be reported to the audit committee. Which of the following would be reported at the next meeting?
- A. Theft using collusion for more than $10,000. but not involving senior management.
- B. Minor theft of less than $10,000, not involving senior management.
- C. Discussion of replacement of the chief audit executive.
- D. Denial of access to requested employees during an audit.
Answer: A
Explanation:
Fraud involving significant amounts, such as theft using collusion for more than $10,000, should be reported to the audit committee at the next meeting. This type of fraud indicates a higher level of risk and potential impact on the organization, which makes it critical for the audit committee to be informed promptly so that appropriate measures can be taken.
Guidelines on fraud reporting from the Institute of Internal Auditors
NEW QUESTION # 316
An electric company hires several independent contractors to trim trees that are in close proximity to electricity lines. Which of the following would be the most effective control to mitigate the risk of contractors submitting fraudulent invoices regarding work completed?
- A. Reconcile invoices and work acceptance sheets submitted by contractors
- B. Utilize unmanned drones to conduct regular flights and photo shoots over the areas where work is performed
- C. Compare actual payments to contractors with budgeted values and analyze discrepancies
- D. Require contractors to submit completed and signed work acceptance sheets
Answer: D
Explanation:
Requiring contractors to submit completed and signed work acceptance sheets is an effective control to mitigate the risk of fraudulent invoices. This control provides direct evidence that the work was completed as agreed, and it offers a verifiable document that can be checked against invoices submitted. This step also ensures that any claims made by contractors can be cross-referenced easily, enhancing transparency and accountability in the billing process.
Best practices in contractor management and invoice verification.
NEW QUESTION # 317
An objective for an audit of a medical research corporation is to evaluate management's controls to ensure that timely reports are submitted to sponsors of contracted research projects. In planning the audit to achieve this objective, the auditor should begin by:
- A. Observing report preparation in a number of laboratories.
- B. Reviewing policies and procedures.
- C. Interviewing a group of research managers.
- D. Sending a questionnaire to a sample of research sponsors.
Answer: B
NEW QUESTION # 318
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IIA-CIA-Part1 Exam is a challenging but rewarding certification that can open up many career opportunities for individuals interested in internal auditing. Passing the exam demonstrates a strong knowledge and understanding of the fundamental principles of internal auditing, which is highly valued by employers in the industry. IIA-CIA-Part1 exam is a valuable investment in one's professional development and can help individuals advance their careers in internal auditing.
To be eligible to take the IIA-CIA-Part1 exam, candidates must meet certain education and experience requirements. They must have a bachelor's degree or equivalent and have at least one year of experience in internal auditing or a related field. Candidates without a degree must have at least five years of experience in internal auditing or a related field. The IIA also offers exemptions for candidates who hold certain professional certifications.
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