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IIA IIA-ACCA - ACCA CIA Challenge Exam

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Total 604 questions

According to IIA guidance, which of the following would not be a consideration for the internal audit activity (IAA) when determining the need to follow-up on recommendations?

A.

Degree of effort and cost needed to correct the reported condition.

B.

Complexity of the corrective action.

C.

Impact that may result should the corrective action fail.

D.

Amount of resources required to conduct the follow-up activities.

Which of the following is not an outcome of control self-assessment?

A.

Informal, soft controls are omitted, and greater focus is placed on hard controls.

B.

The entire objectives-risks-controls infrastructure of an organization is subject to greater monitoring and continuous improvement.

C.

Internal auditors become involved in and knowledgeable about the self-assessment process.

D.

Nonaudit employees become experienced in assessing controls and associating control processes with managing risks.

According to IIA guidance, organizations have the most influence on which element of fraud?

A.

Opportunity.

B.

Rationalization.

C.

Pressure.

D.

Incentives.

A manufacturer is under contract to produce and deliver a number of aircraft to a major airline. As part of the contract, the manufacturer is also providing training to the airline's pilots. At the time of the audit, the delivery of the aircraft had fallen substantially behind schedule while the training had already been completed. If half of the aircraft under contract have been delivered, which of the following should the internal auditor expect to be accounted for in the general ledger?

A.

Training costs allocated to the number of aircraft delivered, and the cost of actual production hours completed to date.

B.

All completed training costs, and the cost of actual production hours completed to date.

C.

Training costs allocated to the number of aircraft delivered, and 50% of contracted production costs.

D.

All completed training costs, and 50% of the contracted production costs.

According to IIA guidance, which of the following are appropriate actions for the chief audit executive regarding management's response to audit recommendations?

A.

Evaluate and verify management's response, and determine the need and scope for additional work.

B.

Evaluate and verify management's response, and establish timelines for corrective action by management.

C.

Oversee the corrective actions undertaken by management, and determine the need and scope for additional work.

D.

Oversee the corrective actions undertaken by management, and establish timelines for corrective action by management.

Which of the following is an effective approach for internal auditors to take to improve collaboration with audit clients during an engagement?

1. Obtain control concerns from the client before the audit begins so the internal auditor can tailor the scope accordingly.

2. Discuss the engagement plan with the client so the client can understand the reasoning behind the approach.

3. Review test criteria and procedures where the client expresses concerns about the type of tests to be conducted.

4. Provide all observations at the end of the audit to ensure the client is in agreement with the facts before publishing the report.

A.

1 and 2 only

B.

1 and 4 only

C.

2 and 3 only

D.

3 and 4 only

It is close to the fiscal year end for a government agency, and the chief audit executive (CAE) has the following items to submit to either the board or the chief executive officer (CEO) for approval. According to IIA guidance, which of the following items should be submitted only to the CEO?

A.

The internal audit risk assessment and audit plan for the next fiscal year.

B.

The internal audit budget and resource plan for the coming fiscal year.

C.

A request for an increase of the CAE's salary for the next fiscal year.

D.

The evaluation and compensation of the internal audit team.

According to IIA guidance, which of the following actions might place the independence of the internal audit function in jeopardy?

A.

Having no active role or involvement in the risk management process.

B.

Auditing the risk management process for reasonableness.

C.

Coordinating and managing the risk management process.

D.

Participating with management in identifying and evaluating risks.

The chief audit executive of a medium-sized financial institution is evaluating the staffing model of the internal audit activity (IAA). According to IIA guidance, which of the following are the most appropriate strategies to maximize the value of the current IAA resources?

• The annual audit plan should include audits that are consistent with the skills of the IAA.

• Audits of high-risk areas of the organization should be conducted by internal audit staff.

• External resources may be hired to provide subject-matter expertise but should be supervised.

• Auditors should develop their skills by being assigned to complex audits for learning opportunities.

A.

1 and 2 only

B.

1 and 4 only

C.

2 and 3 only

D.

3 and 4 only

For which of the following fraud engagement activities would it be most appropriate to involve a forensic auditor?

A.

Independently evaluating conflicts of interests.

B.

Assessing contracts for relevant terms and conditions.

C.

Performing statistical analysis for data anomalies.

D.

Preparing evidentiary documentation.

Which of the following is a detective control for managing the risk of fraud?

A.

Awareness of prior incidents of fraud.

B.

Contractor non-disclosure agreements.

C.

Verification of currency exchange rates.

D.

Receipts for employee expenses.

Which of the following situations would justify the removal of a finding from the final audit report?

A.

Management disagrees with the report findings and conclusions in their responses.

B.

Management has already satisfactorily completed the recommended corrective action.

C.

Management has provided additional information that contradicts the findings.

D.

Management believes that the finding is insignificant and unfairly included in the report.

Which of the followings statements describes a best practice regarding assurance engagement communication activities?

A.

All assurance engagement observations should be communicated to the audit committee.

B.

All assurance engagement observations should be included in the main section of the engagement communication.

C.

During the "communicate" phase of an assurance engagement, it is best to define the methods and timing of engagement communications.

D.

A detailed escalation process should be developed during the planning stage of an assurance engagement.

Due to price risk from the foreign currency purchase of aviation fuel, an airliner has purchased forward contracts to hedge against fluctuations in the exchange rate. When recalculating the exchange losses from individual purchases of jet fuel, which of the following details does the internal auditor need to validate?

1. The hedge documentation designating the hedge.

2. The spot exchange rate on the transaction date.

3. The terms of the forward contract.

4. The amount of fuel purchased.

A.

1 and 2

B.

1 and 4

C.

2 and 3

D.

3 and 4

After the team member who specialized in fraud investigations left the internal audit team, the chief audit executive decided to outsource fraud investigations to a third party service provider on an as needed basis. Which of the following is most likely to be a disadvantage of this outsourcing decision?

A.

Cost.

B.

Independence.

C.

Familiarity.

D.

Flexibility.