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IIA IIA-ACCA - ACCA CIA Challenge Exam

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Page: 6 / 13
Total 604 questions

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.

Internal audit standards, procedures, and techniques.

D.

Fundamentals of accounting, economics, and finance.

According to COSO, which of the following describes a principle related to the control environment?

A.

The organization identifies and assesses changes that could significantly impact the system of internal control.

B.

The organization establishes appropriate authorities and responsibilities in the pursuit of objectives.

C.

The organization selects and develops control activities that contribute to the mitigation of risks.

D.

The organization performs evaluations to ascertain whether internal control components are present and functioning.

Which of the following is an example of a risk avoidance strategy?

A.

Hedging against exchange rate variations.

B.

Limiting access to an organization's data center.

C.

Selling a nonstrategic business unit.

D.

Outsourcing a high-risk activity.

Which of the following best ensures the independence of the internal audit activity?

1. The CEO and audit committee review and endorse any changes to the approved audit plan on an annual basis.

2. The audit committee reviews the performance of the chief audit executive (CAE) periodically.

3. The internal audit charter requires the CAE to report functionally to the audit committee.

A.

3 only

B.

1 and 2 only

C.

2 and 3 only

D.

1, 2, and 3

Which of the following would be the most important consideration by the internal audit activity when selecting employees to perform an internal quality assessment?

A.

Their understanding of auditing standards.

B.

Previous experience working with the internal audit activity.

C.

Their reporting line within the organization.

D.

The nature of their regular duties and responsibilities.

A chief audit executive (CAE) is selecting an internal audit team to perform an audit engagement that requires a high level of knowledge in the areas of finance, investment portfolio management, and taxation. If neither the CAE nor the existing internal audit staff possess the required knowledge, which of the following actions should the CAE take?

A.

Postpone the audit until the CAE hires internal audit staff with the required knowledge.

B.

Ask the audit committee to decide the course of action.

C.

Select the most experienced auditors in the department to perform the engagement.

D.

Hire consultants who possess the required knowledge to perform the engagement.

Upon joining the internal audit activity, each new auditor receives a copy of the audit handbook. Which of the following handbook policies has the greatest risk of compromising audit objectivity?

A.

Internal auditors should obtain 80 hours of continuing professional education every two years, 20 of which should be audit-related, and the remainder may be operations-related.

B.

Internal auditors should rotate to other areas of the organization for nonaudit assignments to gain an understanding of the organization's operations.

C.

Internal auditors should have direct and unrestricted access to personnel and information throughout the organization and the governing board.

D.

Internal auditors should undergo annual performance appraisals conducted by the chief audit executive, who reports administratively to the chief financial officer.

According to IIA guidance, which of the following statements describes one of the similarities between assurance and consulting services?

A.

When planning assurance and consulting engagements, internal auditors must consider the strategies and objectives of the activity being reviewed.

B.

Internal auditors determine the engagement objectives, scope, and work program for both assurance and consulting services.

C.

Internal auditors must not provide assurance or consulting services for an activity for which they had responsibility within the previous year.

D.

Both assurance and consulting services generally involve the internal auditor, the area under review, senior management, and the board.

Which of the following actions would be characterized as a preventive control to safeguard inventory from the risk of theft?

1. Locking doors and physically securing inventory items.

2. Independently observing the receipt of materials.

3. Conducting monthly inventory counts.

4. Requiring the use of employee ID badges at all times.

A.

1 and 3.

B.

1 and 4.

C.

2 and 3.

D.

2 and 4.

Which of the following are generally recognized as essential elements of a corporate social responsibility program?

A.

Human rights and the environment.

B.

Organizational governance and financial reporting.

C.

Fair operating practices and government regulation.

D.

Consumer issues and return on investment.

Which of the following is considered a violation of The IIA's Code of Ethics?

A.

An auditor conveys public information about an organization's financial condition.

B.

An auditor reports a manager's illegal activity to senior management, rather than reporting the incident to the appropriate external authority.

C.

An auditor receives allegations of fraud from a whistleblower and immediately reports the allegations to senior management.

D.

An auditor reports material deficiencies, despite the fact that management is already aware of the defects.

Which of the following is an example of a detective control?

A.

Automatic shut-off valve.

B.

Auto-correct software functionality.

C.

Confirmation with suppliers and vendors.

D.

Safety instructions.

Which of the following actions should the audit committee take to promote organizational independence for the internal audit activity?

A.

Delegate final approval of the risk-based internal audit plan to the chief audit executive (CAE).

B.

Approve the annual budget and resource plan for the internal audit activity.

C.

Assist the CAE with hiring objective and competent internal audit staff.

D.

Encourage the CAE to communicate and coordinate with the external auditor.

Which of the following statements accurately describes an internal auditor's responsibility with regard to due professional care?

A.

An internal auditor should express an opinion only when consensus with top management has been achieved.

B.

An internal auditor's opinion should be based on experience and free of all bias.

C.

An internal auditor's opinion should be based on factual evidence.

D.

An internal auditor's opinion should be limited to the effectiveness of internal controls.

According to the COSO enterprise risk management framework, which of the following best describes the activity that helps ensure risk responses are carried out effectively?

A.

Objective setting.

B.

Control activities.

C.

Information and communication.

D.

Event identification.