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Home IIA IIA-CIA-Part3

IIA IIA-CIA-Part3 Exam Practice Questions (P. 1)

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Question #1
Which of the following statements is correct regarding risk analysis?
  1. A
    The extent to which management judgments are required in an area could serve as a risk factor in assisting the auditor in making a comparative risk analysis.
  2. B
    The highest risk assessment should always be assigned to the area with the largest potential loss.
  3. C
    The highest risk assessment should always be assigned to the area with the highest probability of occurrence.
  4. D
    Risk analysis must be reduced to quantitative terms in order to provide meaningful comparisons across an organization.

Correct Answer:
A

Question #2
Which of the following statements regarding organizational governance is not correct?
  1. A
    An effective internal audit function is one of the four cornerstones of good governance.
  2. B
    Those performing governance activities are accountable to the customer.
  3. C
    Accountability is one of the key elements of organizational governance.
  4. D
    Governance principles and the need for an internal audit function are applicable to governmental and not-for-profit activities.

Correct Answer:
B

Question #3
Which of the following is a role of the board of directors in the governance process?
  1. A
    Conduct periodic assessments of the organization's governance systems.
  2. B
    Obtain assurance concerning the effectiveness of the organization's governance systems.
  3. C
    Implement an effective system of internal controls to support the organization's governance systems.
  4. D
    Review and approve operational goals and objectives.

Correct Answer:
B

Question #4
Which is the least effective form of risk management?
  1. A
    Systems-based preventive control.
  2. B
    People-based preventive control.
  3. C
    Systems-based detective control.
  4. D
    People-based detective control.

Correct Answer:
D

Question #5
Which of the following statements is correct regarding corporate compensation systems and related bonuses?
1. A bonus system should be considered part of the control environment of an organization and should be considered in formulating a report on internal control.
2. Compensation systems are not part of an organization's control system and should not be reported as such.
3. An audit of an organization's compensation system should be performed independently of an audit of the control system over other functions that impact corporate bonuses.
  1. A
    1 only
  2. B
    2 only
  3. C
    3 only
  4. D
    2 and 3 only

Correct Answer:
A

Question #6
The first stage in the development of a crisis management program is to:
  1. A
    Formulate contingency plans.
  2. B
    Conduct a risk analysis.
  3. C
    Create a crisis management team.
  4. D
    Practice the response to a crisis.

Correct Answer:
B

Question #7
When developing an effective risk-based plan to determine audit priorities, an internal audit activity should start by:
  1. A
    Identifying risks to the organization's operations.
  2. B
    Observing and analyzing controls.
  3. C
    Prioritizing known risks.
  4. D
    Reviewing organizational objectives.

Correct Answer:
D

Question #8
The decision to implement enhanced failure detection and back-up systems to improve data integrity is an example of which risk response?
  1. A
    Risk acceptance.
  2. B
    Risk sharing.
  3. C
    Risk avoidance.
  4. D
    Risk reduction.

Correct Answer:
D

Question #9
Which of the following activities most significantly increases the risk that a bank will make poor-quality loans to its customers?
  1. A
    Borrowers may not sign all required mortgage loan documentation.
  2. B
    Fees paid by the borrower at the time of the loan may not be deposited in a timely manner.
  3. C
    The bank's loan documentation may not meet the government's disclosure requirements.
  4. D
    Loan officers may override the lending criteria established by senior management.

Correct Answer:
D

Question #10
The main reason to establish internal controls in an organization is to:
  1. A
    Encourage compliance with policies and procedures.
  2. B
    Safeguard the resources of the organization.
  3. C
    Ensure the accuracy, reliability, and timeliness of information.
  4. D
    Provide reasonable assurance on the achievement of objectives.

Correct Answer:
D

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