IIA IIA CIA PART1 Exam Questions

Questions for the IIA CIA PART1 were updated on : Jun 07 ,2024

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Question 1

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

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Question 2

A credit card company detects potential errors in credit card numbers by checking whether all
entered numbers contain the correct amount of digits. This is an example of which of the following IT
controls?

  • A. Logic test.
  • B. Check digits.
  • C. Data integrity tests.
  • D. Balancing control activities.
Answer:

A

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Question 3

Which two of the following are preventive controls in a check disbursement process?
1. Daily reconciliation of the bank account used for check disbursements and prompt follow-up of un-
reconciled items.
2. Segregation of the following duties: establishing new vendors, approving checks, and reconciling
the bank account.
3. An activity report detailing who accesses the check disbursement system and the nature of any
action taken in the system.
4. Evidence of strong access controls ensuring that authorized individuals have access only to the
functions related to their responsibilities.

  • A. 1 and 3.
  • B. 1 and 4.
  • C. 2 and 3.
  • D. 2 and 4.
Answer:

D

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Question 4

A large trucking organization wants to reduce traffic accidents by improving its system of internal
controls.
Which of the following controls is correctly classified?
1. Review of speeding violations to identify repetitive locations and drivers is an example of a
preventive control.
2. Defensive driver training is an example of a directive control.
3. The installation of tracking devices in delivery vehicles is an example of a corrective control.
4. Providing a vehicle driver handbook is an example of a detective control.

  • A. 1 and 2.
  • B. 1 and 4.
  • C. 2 and 3.
  • D. 3 and 4.
Answer:

A

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Question 5

Which segregation of duties would best reduce the risk of payroll fraud?

  • A. Human resources personnel add employees, and payroll personnel process hours and enter employee bank account numbers. Paychecks are automatically deposited in the employee's bank account.
  • B. Human resources personnel add employees, payroll personnel process hours, and human resources personnel deliver paychecks to employees.
  • C. Human resources personnel add employees, review and submit payroll hours to the payroll department for processing, and deliver paychecks to employees.
  • D. Human resources personnel add employees and enter employee bank information. Payroll personnel process hours, and paychecks are automatically deposited in the employee's bank account.
Answer:

A

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Question 6

An organization is beginning to implement an enterprise risk management program. One of the first
steps is to develop a common risk language. Which of the following statements about a common risk
language is true?

  • A. Management will be able to reduce inherent risk because they will have a better understanding of risk.
  • B. Internal auditors will be able to reduce their sample sizes because controls will be more consistent.
  • C. Stakeholders will have more assurance that the risks are assessed consistently.
  • D. Decision makers will understand that the likelihood of missing or ineffective controls will be reduced.
Answer:

C

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Question 7

An organization invests its savings in a volatile stock with the potential for high gains rather than a
mutual fund with a lower expected return and lower volatility. This best describes which of the
following risk concepts?

  • A. Risk identification.
  • B. Risk appetite.
  • C. Risk capacity.
  • D. Risk tolerance.
Answer:

D

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Question 8

Which of the following best describes the misdirection of payments on accounts receivable to an
employee's bank account?

  • A. Fraud open on the books.
  • B. Fraud hidden on the books.
  • C. Fraud off the books.
  • D. Fraud on the balance sheet.
Answer:

C

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Question 9

When auditing the award of a major contract, which of the following should an internal auditor
suspect as a red flag for a bidding fraud scheme?
1. Subsequent change orders increase requirements for low-bid items.
2. Material contract requirements are different on the actual contract than on the request for bids.
3. A high percentage of employees are charged to indirect accounts.
4. Losing bidders are hired as subcontractors.

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

D

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Question 10

Which of the following combinations of conditions is most likely a red flag for fraud?

  • A. The practice of surprise audits and the implementation of an employee support program.
  • B. Hiring an employee with a prior fraud conviction and yearly management review.
  • C. Occasional accounting department overrides and discontinuation of the anonymous fraud hotline due to infrequent use.
  • D. A veteran employee in upper management experiencing financial difficulties and recently implemented enhanced controls.
Answer:

C

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Question 11

Which of the following techniques would provide the most compelling evidence that a safety hazard
exists within a manufacturing facility?

  • A. Observation of the facility during operations.
  • B. Questioning of facility management, including the facility safety officer.
  • C. Analysis of facility operating reports, focusing on instances when breakdowns occurred.
  • D. Review of records involving safety violations, filed by facility production employees.
Answer:

A

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Question 12

While performing an accounts payable engagement, a senior auditor wants to conduct several tests
of controls for travel expenses. Which of the following actions are most appropriate for the senior
auditor to undertake?
1. Ensure all tests use a random sampling technique.
2. Consider a judgmental approach for the sample size.
3. Assess testing errors through root cause analysis.
4. Ensure that the entire data set is tested.

  • A. 1 and 2.
  • B. 1 and 3.
  • C. 2 and 3.
  • D. 2 and 4.
Answer:

C

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Question 13

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

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Question 14

Which of the following factors should be considered when determining the appropriate combination
of manual techniques and computer-assisted audit techniques (CAATs) to be used during an audit?
1. Acceptance of CAATs findings by entity management.
2. Computer knowledge and expertise of the auditor.
3. Time constraints.
4. Level of audit risk.

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

D

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Question 15

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

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