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NEW QUESTION 1
According to COSO, which of the following is not considered one of the components of an organization's internal environment?

  • A. Authority and responsibility to resolve issues.
  • B. Framework to plan, execute and monitor activities.
  • C. Integrated responses to multiple risks.
  • D. Knowledge and skills needed to perform activities.

Answer: C

NEW QUESTION 2
Which of the following is an example of a directive control?

  • A. Segregation of duties.
  • B. Exception reports.
  • C. Incentive compensation plans.
  • D. Automated reconciliations.

Answer: C

NEW QUESTION 3
According to The IIA's Code of Ethics, which of the following statements is true?

  • A. When an internal auditor releases required information to a regulator, resulting in a significant loss through fines and penalties for the organization, he fails to add value.
  • B. When an internal auditor limits the scope of the audit engagement after learning that management is hiding relevant information, he demonstrates integrity.
  • C. When an internal auditor disagrees with the treatment received by workers in the organization's foreign subsidiary and alters the audit program to highlight the issue, he fails to demonstrate objectivity.
  • D. When an internal auditor continues with an audit engagement, despite the audit client's claims that the work performed is unnecessary and redundant he fails to demonstrate competency.

Answer: C

NEW QUESTION 4
Which of the following is most likely to function as a directive control?

  • A. Security dogs.
  • B. Alert employees.
  • C. Insurance claims.
  • D. Cycle counts.

Answer: B

NEW QUESTION 5
A new director was hired to lead the internal audit activity at a small start-up company. Which of the following assignments would impair the director's independence?

  • A. Preparing the financial statements for the company's defined contribution plan.
  • B. Performing a pre-implementation review of the company's payroll application.
  • C. Providing the COBIT framework as a possible IT management tool.
  • D. Reviewing the company's policy for foreign currency translation adjustments for compliance with accounting standards.

Answer: A

NEW QUESTION 6
An internal auditor uses a predefined macro provided in a popular spreadsheet application to verify the present value of the organization's investments. Which of the following is the most appropriate course of action regarding the auditor's use of this functionality?

  • A. The auditor should accept the calculations generated by the function, as any further work or documentation would be inefficient.
  • B. The auditor should perform a manual recalculation of several results to validate and document the results.
  • C. The auditor should review the programming of the macro before its use to ensure that it is appropriate for the required calculations.
  • D. The auditor should tabulate the results in the spreadsheet to ensure the macro has generated the correct results for all calculations.

Answer: B

NEW QUESTION 7
Reviewing prior audit reports and supporting workpapers before an engagement starts enables an internal auditor to do which of the following?
* 1. To understand better the activity and processes that will be audited.
* 2. To identify the audit procedures that will be used during the engagement.
* 3. To ensure that matters of greatest vulnerability will be addressed.
* 4. To use the information obtained as evidence in the current engagement.

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

Answer: B

NEW QUESTION 8
A government agency maintains a system of internal control, according to the COSO model, and has made a change to its employee performance reviews and rewards program. This change relates to which of the following components of COSO's internal control framework?

  • A. Control environment.
  • B. Control activities.
  • C. Information and communication.
  • D. Monitoring activities.

Answer: A

NEW QUESTION 9
Which of the following offers the best evidence that the internal audit activity has achieved organizational independence?

  • A. An independent third party has assessed the organization's system of internal controls to be adequate and effective.
  • B. The chief audit executive reports both functionally and administratively to the CEO.
  • C. The internal audit charter is drafted properly and approved by the appropriate parties.
  • D. The mission statement and strategy of the internal audit activity demonstrates alignment to organizational objectives.

Answer: B

NEW QUESTION 10
According to The IIA's Code of Ethics, which of the following is true?

  • A. Confidentiality requires that auditors disclose all material facts known to them.
  • B. Integrity requires that auditors perform internal audit services in accordance with the Standards.
  • C. Objectivity requires that auditors perform their work with honesty, diligence, and responsibility.
  • D. Confidentiality requires that auditors be prudent in the use and protection of client information.

Answer: D

NEW QUESTION 11
Which of the following would not be considered part of preliminary survey of an engagement area?

  • A. Interviews with individuals affected by the entity.
  • B. Functional walk through test.
  • C. Analytical reviews.
  • D. Sampling scope.

Answer: D

NEW QUESTION 12
An internal audit team is performing an audit of workplace accident claims.
Which of the following actions by the audit team best demonstrates due professional care?

  • A. Having an occupational health officer on the engagement team.
  • B. Determining that the claims have been classified properly.
  • C. Placing reliance on medical reports from the injured worker's doctor.
  • D. Reviewing claims to ensure all accidents actually occurred in the workplace.

Answer: A

NEW QUESTION 13
Which of the following is an example of a management control technique?

  • A. A budget.
  • B. A risk assessment.
  • C. The board of directors.
  • D. The control environment.

Answer: A

NEW QUESTION 14
Which of the following is the primary engagement responsibility of an entry-level internal auditor?

  • A. Leadership.
  • B. Documentation.
  • C. Analysis.
  • D. Reporting.

Answer: C

NEW QUESTION 15
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 16
Which of the following professional development approaches would offer internal auditors the most opportunities to broaden their engagement experiences?

  • A. Assign more experienced internal auditors to mentor the less experienced auditors.
  • B. Send internal auditors to external trainings in advanced internal audit topics.
  • C. Appraise internal auditors' performance and competencies at least annually and issue constructive feedback.
  • D. Rotate internal auditors among different engagement assignments.

Answer: D

NEW QUESTION 17
An internal auditor is reviewing the accounts receivable when she discovers account balances more than three years old. The auditor was previously supervising the area during this time, and she subsequently advises the chief audit executive (CAE) of a potential conflict.
Which of the following is the most appropriate course of action for the CAE to take?

  • A. Replace the auditor with another audit staff member.
  • B. Continue with the present auditor, as more than one year has passed.
  • C. Withdraw the audit team and outsource the financial audit of the division.
  • D. Work with the division's management to resolve the situation.

Answer: A

NEW QUESTION 18
The chief audit executive (CAE) of a small internal audit activity (IAA) performs all high-risk engagements on the annual audit plan to make use of his knowledge and experience and to maximize the efficient use of audit resources. Which of the following statements is most relevant regarding this practice?

  • A. The CAE's work may be reviewed by any other experienced staff member within the IAA.
  • B. The CAE's work should be reviewed by an individual with the appropriate background and knowledge.
  • C. The CAE may self-review his work, provided he discloses this practice in the final report.
  • D. The CAE should avoid performing engagements to ensure he is able to review all audit work objectively.

Answer: B

NEW QUESTION 19
According to IIA guidance, which of the following should be formally documented in the internal audit charter?

  • A. The internal audit activity's responsibility for imposing risk management processes.
  • B. The internal audit activity's responsibility for the organization's governance framework.
  • C. The nature of consulting services provided by the internal audit activity.
  • D. The budgeting process for the internal audit activity.

Answer: C

NEW QUESTION 20
According to IIA guidance, which of the following describes the primary reason to implement environmental and social safeguards within an organization?

  • A. To enable Triple Bottom Line reporting capability.
  • B. To facilitate the conduct of risk assessment.
  • C. To achieve and maintain sustainable development.
  • D. To fulfill regulatory and compliance requirements.

Answer: C

NEW QUESTION 21
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