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Home IIA IIA-CIA-Part1

IIA IIA-CIA-Part1 Exam Practice Questions (P. 5)

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Question #41
Which of the following characteristics could indicate high risk?
  1. A
    Management decisions are made by a committee of mid to higher level management personnel.
  2. B
    The company is not in a rapidly growing industry.
  3. C
    The company's profitability is lower than the industry norm.
  4. D
    Management turnover has been very low.

Correct Answer:
C

Question #42
An auditor is using audit software to check inventory accuracy. Which of the following would be an indicator of poor input edit controls?
  1. A
    Negative quantities on hand.
  2. B
    Total dollar values of zero for some parts.
  3. C
    Alpha characters in the field for order lead time.
  4. D
    Reorder levels set too high.

Correct Answer:
C

Question #43
Two individuals are being considered for an audit team that is to perform a highly technical review.
Which of the following situations would preclude selection of the individual for the audit due to an objectivity concern?
I. Person A is a member of the internal audit staff and has the required technical skills. Person A participated in a controls review of the system to be audited when it was being developed.
II. Person B is a technical specialist who understands the audit area but is not a member of the internal audit staff. Although person B has personal credibility in the information systems department to be audited, person B works for another department in the organization.
  1. A
    I only
  2. B
    II only
  3. C
    Both I and II.
  4. D
    Neither I nor II.

Correct Answer:
D

Question #44
Which of the following measurements could an auditor use in an audit of the efficiency of a motor vehicle inspection facility?
  1. A
    The total number of cars approved.
  2. B
    The ratio of cars rejected to total cars inspected.
  3. C
    The number of cars inspected per inspection agent.
  4. D
    The average amount of fees collected per cashier.

Correct Answer:
C

Question #45
A code of business conduct provides?
  1. A
    A fraud avoidance plan that does not explicitly describe punishments for violations.
  2. B
    A passive method of fraud deterrence.
  3. C
    A program to anonymously report irregularities to authorities.
  4. D
    An alternative to "tone at the top" programs.

Correct Answer:
B

Question #46
Fraud is most frequently detected by:
  1. A
    Following up on tips from employees or citizens.
  2. B
    Following up on analytical review of high-risk areas.
  3. C
    Performing periodic reconciliations over cash and other assets.
  4. D
    Performing unannounced audits or reviews of programs or departments.

Correct Answer:
A

Question #47
After several years in the engineering department, an engineer was transferred to the internal audit department. One month later, the new auditor was assigned to an assurance engagement for the engineering department. When the auditor's former engineering supervisor suggested a change in the sample selection method, the auditor consulted with the audit supervisor. They determined that the suggested method would not be as representative and that the original selection method should be used. In this situation, the auditor:
  1. A
    Maintained an independent mental attitude and is therefore objective.
  2. B
    Has subordinated professional judgment, and objectivity is therefore impaired.
  3. C
    Does not have objectivity since the auditor recently transferred from the engineering department.
  4. D
    Does not have independent organizational status since the auditor recently transferred from the engineering department.

Correct Answer:
C

Question #48
A charitable organization provides substantial grants for important medical research. Assuming marginal controls are in place, which of the following possible frauds or misuses of organization assets should be considered the area of greatest risk?
  1. A
    Senior executives are using company travel and entertainment funds for activities that might be considered questionable.
  2. B
    Purchases of office supplies are made from fictitious vendors.
  3. C
    Grants are made to organizations associated with senior executives.
  4. D
    A payroll clerk has added a fictitious employee.

Correct Answer:
C

Question #49
If earnings on financial statements for internal use only have been manipulated in the past, an internal auditor is likely to focus on which of the following?
  1. A
    The proper accrual of payables at the end of the interim period.
  2. B
    The timing of revenue recognition and the valuation of inventories.
  3. C
    Whether accounting estimates are reasonable given past actual results.
  4. D
    Whether there have been changes in accounting principles that materially affect the financial statements.

Correct Answer:
B

Question #50
Which of the following procedures would provide the best evidence of the effectiveness of a credit-granting function?
  1. A
    Observe the process.
  2. B
    Review the trend in receivables write-offs.
  3. C
    Ask the credit manager about the effectiveness of the function.
  4. D
    Check for evidence of credit approval on a sample of customer orders.

Correct Answer:
B

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