IIA-CIA-Part1 Self-Study Guide for Becoming an Essentials of Internal Auditing Expert
IIA-CIA-Part1 Study Guide Realistic Verified IIA-CIA-Part1 Dumps
IIA-CIA-Part1 (Essentials of Internal Auditing) exam is a globally recognized certification exam for professionals who want to establish their expertise in the field of internal auditing. IIA-CIA-Part1 exam is administered by the Institute of Internal Auditors (IIA) and is the first step towards earning the Certified Internal Auditor (CIA) designation. Passing IIA-CIA-Part1 exam demonstrates that the candidate has a strong understanding of the fundamentals of internal auditing and is equipped to handle the challenges of the profession.
NEW QUESTION # 116
In its five years of existence, an internal audit activity conducted a single internal assessment of its quality assurance and improvement program (QAIP). The results of that assessment showed that the internal audit activity did not conform with the Standards. Prior to this, an external assessment of the internal audit activity's QAIP was conducted, which reported that the internal audit activity was in conformance with the Standards.
Considering the two assessments, what would be the internal audit activity's current state of conformance with the Standards?
- A. Nonconformance with the Standards
- B. Unable to determine conformance with the Standards.
- C. Conformance with the Standards.
- D. Partial conformance with the Standards
Answer: A
NEW QUESTION # 117
The chief audit executive (CAE) is drafting the annual internal audit plan and seeks input from senior management and the external auditor prior to submitting it for approval to the board. According to MA guidance, which of the following statements is true regarding this scenario?
- A. The CAE's actions are likely to impair the Independence of the internal audit activity.
- B. The CAE acted appropriately, and the independence of the internal audit activity was not impaired.
- C. The CAE acted appropriately, as he has authority to determine who reviews and approves the audit plan.
- D. The CAE should have developed the audit plan without outside influence to maintain objectivity.
Answer: B
Explanation:
The CAE acted appropriately, and the independence of the internal audit activity was not impaired by seeking input from senior management and the external auditor prior to submitting the annual audit plan for board approval. This practice aligns with the IIA's guidance, which encourages collaboration and communication to ensure that the audit plan addresses relevant risks and aligns with organizational goals.References: The IIA's International Standards for the Professional Practice of Internal Auditing regarding the development of the internal audit plan.
NEW QUESTION # 118
Which of the following scenarios demonstrates an impairment to internal audit independence?
- A. The internal auditor tarts to disclose a potential conflict of interest relationship with management of the area under review
- B. The internal auditor was assigned to an assurance review of an area for which he previously had responsibilities
- C. The internal auditor concludes that controls operate effectively, although he did not gather supporting evidence
- D. The internal auditor s denied access to partner information from management of me area under review
Answer: B
Explanation:
An internal auditor assigned to review an area for which they previously had operational responsibilities demonstrates an impairment to internal audit independence. This scenario presents a self-review threat, where the auditor might be biased, consciously or unconsciously, in their evaluation of controls and operations due to their previous involvement. References: IIA Standard 1130: Impairment to Independence or Objectivity.
NEW QUESTION # 119
An organization invests its savings in a volatile stock with the potential for high gains rather than a mutual fund with a lower expected return and lower volatility. This best describes which of the following risk concepts?
- A. Risk tolerance.
- B. Risk capacity.
- C. Risk appetite.
- D. Risk identification.
Answer: A
NEW QUESTION # 120
As part of a fraud investigation by regulators, a court order was issued to a bank. The court order requested the chief audit executive (CAE) to provide access to a number of audit reports and workpapers, some of which included customers' confidential information such as transaction activity and other personal details. What is the appropriate response by the CAE?
- A. Respond promptly and provide all that was requested by the court order.
- B. Consult with legal counsel to determine what information to provide.
- C. Seek permission from customers prior to sharing their information.
- D. Reject the court order, citing a potential breach of customers' confidentiality agreement
Answer: B
Explanation:
When faced with a court order that may involve sharing confidential information, it is appropriate and prudent for the chief audit executive (CAE) to consult with legal counsel. This step ensures that the CAE understands the legal obligations and constraints before disclosing audit reports and workpapers that contain sensitive customer information, balancing legal compliance with the duty to protect confidentiality.References: Institute of Internal Auditors (IIA) - Guidelines on Handling Legal and Ethical Issues
NEW QUESTION # 121
Which of the following would most likely function as a detective control?
- A. Insurance claims.
- B. Security dogs.
- C. Cycle counts.
- D. Alert employees.
Answer: C
Explanation:
Section: Volume C
NEW QUESTION # 122
Which of the following would be an appropriate outcome of a quality assurance and improvement program in an internal audit activity?
1. Modification of resources.
2. Corrections to procedures.
3. Changes in processes.
4. Implementation of new technology.
- A. 1, 2, 3, and 4
- B. 2 and 4 only
- C. 1, 2, and 3 only
- D. 3 and 4 only
Answer: A
NEW QUESTION # 123
Which of the following is most likely to impair the internal audit activity's independence?
- A. Concluding that an internal control is effective without first obtaining evidence
- B. Assigning compliance responsibilities to the chief audit executive.
- C. Establishing an internal audit activity without documented policies and procedures.
- D. Undertaking audit work in an area where internal auditors lack the necessary skills.
Answer: B
NEW QUESTION # 124
An internal audit manager of a furniture manufacturing organization is planning an audit of the procurement process for kiln-dried wood. The procurement department maintains six procurement officers to manage 24 different suppliers used by the organization. Which of the following controls would best mitigate the risk of employees receiving kickbacks from suppliers?
- A. Periodic inventories of kiln-dried wood at the organization's warehouse.
- B. The periodic rotation of procurement officers' assignments to supplier accounts.
- C. An automated computer report, organized by supplier, of any invoices for the same amount.
- D. A pre-award financial capacity analysis of suppliers.
Answer: B
NEW QUESTION # 125
Which of the following is a key performance indicator for an internal audit function?
- A. Implementation of new audit computer software.
- B. Audit expenditures compared to financial budgets.
- C. Frequency of meetings with the board members.
- D. Percent of required continuing education hours completed.
Answer: D
NEW QUESTION # 126
Which of the following situations would most likely result in the auditor in charge (AIC) recommending that the staff auditor further investigate non-compliant items?
- A. A staff auditor conducted a test of 25 non-statistical sample items, selected judgmentally, and 5 are not in compliance with organizational policy.
- B. Before the staff auditor conducted a test of statistical sample items, the AIC was already aware of underlying control weaknesses.
- C. A staff auditor conducted a test of statistical sample items, the results of which fall below the acceptable error rate by less than one percentage point.
- D. A staff auditor conducted a test of 85 non-statistical sample items, selected randomly, and 5 are not in compliance with organizational policy.
Answer: A
Explanation:
Section: Volume D
NEW QUESTION # 127
Which of the following best demonstrates the board of directors' governance over internal control?
- A. The board may be assisted by an audit committee, chaired by the chief audit executive.
- B. The majority of board members are experienced and qualified members of the organization's executive management team.
- C. The board bears direct responsibility for developing and implementing the internal control system.
- D. The board is responsible for succession planning for the CEO and other key members of the executive management team.
Answer: C
NEW QUESTION # 128
According to IIA guidance, which of the following is an area in which the internal auditor should be proficient?
- A. Management principles.
- B. Computerized information systems.
- C. Fundamentals of accounting, economics, and finance.
- D. Internal audit standards, procedures, and techniques.
Answer: D
Explanation:
Section: Volume F
NEW QUESTION # 129
Which of the following is a requirement for an assurance engagement that may not be for a consulting engagement?
- A. The scope and objective of the engagement is agreed upon based on the engagement client's needs.
- B. The internal audit activity must ensure management actions have been implemented effectively or risk accepted.
- C. The internal audit activity has to ensure team members' objectivity is not impaired.
- D. Auditors cannot participate in an assurance engagement of a function for which they previously performed a consulting engagement.
Answer: D
NEW QUESTION # 130
In which of the following situations would fishbone diagrams be most useful?
- A. The team consists of experts who can resolve problems without much difficulty.
- B. The problem is complicated and the root cause is unknown.
- C. The team is too small for brainstorming to be effective.
- D. Team members cannot effectively communicate with each other.
Answer: B
NEW QUESTION # 131
During a review of the procurement function, an internal auditor identified an existing control for adding new vendors into the vendor contract system. Which of the following would best help the auditor determine the adequacy of the control's design?
- A. Flowchart of the vendor addition process.
- B. Interview with management of the procurement function.
- C. Independent confirmations sent to vendors.
- D. Analysis of the control's costs and benefits.
Answer: A
Explanation:
To determine the adequacy of the control's design for adding new vendors into the vendor contract system, a flowchart of the vendor addition process would be the most useful. A flowchart provides a clear and detailed visualization of the process, highlighting each step involved and the controls in place. This allows the auditor to assess whether the design of the control is appropriate and sufficient to mitigate relevant risks. While interviews, confirmations, and cost-benefit analyses provide useful information, they do not offer the same level of detailed insight into the control's design as a flowchart does.References: Institute of Internal Auditors (IIA) - International Professional Practices Framework (IPPF)
NEW QUESTION # 132
In which of the following circumstances is it apparent that the internal auditor exercised due professional care in carrying out his duties?
1. The internal auditor weighed the cost of the engagement against its potential benefits.
2. The internal auditor used anonymous information from a whistleblower to report the existence of fraudulent activity.
3. The internal auditor found minor and major instances of fraud and highlighted only the major instances in its report, in consideration of the board's limited time.
4. The internal auditor decided to use new auditing software to assist with the statistical analysis required during the engagement.
- A. 1 and 2 only
- B. 1 and 4 only
- C. 3 and 4 only
- D. 2 and 3 only
Answer: B
NEW QUESTION # 133
The chief audit executive (CAE) wants to ensure that there are sufficient resources
available to fulfill the responsibilities of the internal audit activity in the coming year. Which statement describes the most logical sequence of events for the CAE to undertake in order to achieve this objective?
- A. Confirm budget; review existing resources; obtain any new resources required; confirm new audit plan.
- B. Review prior year audit plan; review existing resources; confirm new audit plan; confirm budget.
- C. Confirm audit plan; confirm budget; review existing resources; identify outstanding resource requirements.
- D. Review results of prior year audit plan; adjust current plan accordingly; hire required resources; confirm budget.
Answer: C
NEW QUESTION # 134
Which of the following is not a standard technique that the chief audit executive (CAE) would use to provide evidence of supervisory review of working papers?
- A. The CAE prepares a memorandum discussing the results of the working paper review.
- B. The CAE completes an engagement working paper checklist.
- C. The CAE utilizes an external third party to make an objective recommendation after each working paper review.
- D. The CAE initials and dates every working paper after it has been reviewed.
Answer: C
Explanation:
Section: Volume E
NEW QUESTION # 135
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Candidates who pass the IIA-CIA-Part1 exam are well on their way to becoming Certified Internal Auditors. Essentials of Internal Auditing certification is highly respected in the industry and demonstrates a candidate's commitment to the profession of internal auditing. It is also a requirement for many internal auditing positions in both the public and private sectors.
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