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Free Certified Internal IIA-CIA-Part1 Ultimate Study Guide (Updated 190 Questions)
NEW QUESTION 90
Which of the following elements should an auditor recommend for inclusion in an organization's code of ethics?
I.Ethics should vary with local customs in the organization's foreign operations.
II.Whistle-blowing should be discouraged because it can cause distrust among employees and false accusations which waste organizational resources on investigations.
III.Ethical behavior should not be incorporated into performance evaluations because it is too subjective and controversial.
- A. II only.
- B. I, II, and III.
- C. None of the above.
- D. I only.
Answer: C
NEW QUESTION 91
Human resources and payroll are separate departments. Which of the following combinations would provide the best segregation of duties?
- A. Human resources personnel add employees, review and submit payroll hours to the payroll department for processing, and deliver paychecks to employees.
- B. Payroll personnel add employees and enter employee bank account numbers but process hours only as approved by the human resources department. Paychecks are automatically deposited in the employee's bank account.
- C. 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.
- D. Human resources personnel add employees, payroll personnel process hours, and human resources personnel deliver paychecks to employees.
Answer: C
NEW QUESTION 92
A medical insurance provider uses an electronic claims-submission process and suspects that a number of physicians have submitted claims for treatments that were not performed. Which of the following control procedures would be most effective to detect this type of fraud?
- A. Require the physician to submit a signed statement attesting that the treatments had been performed.
- B. Send confirmations to the physicians,requesting them to verify the exact nature of the claims submitted to the insurance provider.
- C. Use computer software to identify abnormal claims based on the insured's age and medical history.
- D. Develop an integrated test facility and submit false claims to verify that the system is detecting such claims on a consistent basis.
Answer: C
NEW QUESTION 93
Allegations have been made that an organization's share price has been manipulated. Which of the following would provide an internal auditor with the most objective evidence in this case?
- A. Former financial consultants.
- B. Major shareholders of the organization.
- C. Former members of management.
- D. Large customers of the organization.
Answer: A
NEW QUESTION 94
An internal auditor notes that employees are able to download files from the internet. According to IIA guidance, which of the following strategies would best protect the organization from the risk of copyright infringement and licensing violations resulting from this practice?
- A. Apply antivirus and patch management software.
- B. Install a software inventory management application.
- C. Utilize secure socket layer encryption.
- D. Utilize dedicated and encrypted network connections.
Answer: B
NEW QUESTION 95
The chief audit executive needs to revise the internal audit activity's (IAA) charter. The revision must address the element of authority. Which of the following statements meets this requirement?
- A. The IAA shall be granted access to all records relevant to the performance of its duties.
- B. The IAA shall deliver an initial report of its findings to the organization's board within 120 days of the beginning of the engagement.
- C. Following its assessment, the IAA shall recommend risk control processes and resource management strategies.
- D. The IAA shall identify and assess all potential risks to the operations of the organization.
Answer: A
NEW QUESTION 96
Which of the following factors have the greatest influence on the independence of the internal audit activity?
- A. Rotational assignments and familiarity of the internal audit activity.
- B. Employee incentives and self review of the internal audit activity.
- C. Organizational positioning and scope control of the internal audit activity.
- D. Quality assessments and cultural biases of the internal audit activity.
Answer: C
NEW QUESTION 97
According to IIA guidance, which of the following objectives of an assurance engagement for the organization's risk management process is valid?
- A. Risks have been accurately analyzed and evaluated.
- B. The board is appropriately addressing intolerable risks.
- C. All controls are both adequate and efficient.
- D. All risks have been identified and mitigated.
Answer: A
NEW QUESTION 98
Management has decided to invest significant capital in a new and innovative large computer system. They understand that they are one of the first organizations to implement this system, but they believe the benefits outweigh the uncertainty over the performance and reliability of the software. This decision best describes which aspect of risk management?
- A. Risk tolerance.
- B. Risk appetite.
- C. Inherent risk.
- D. Residual risk.
Answer: B
NEW QUESTION 99
Which of the following factors related to an organization's performance management system would not contribute to the organization's success?
- A. Performance management is integrated into other organizational processes and human resource processes.
- B. Staff members own the performance management process, thereby ensuring implementation and accountability.
- C. Performance management is linked to competence and knowledge management.
- D. Subordinates and superiors have shared responsibility for the performance management process.
Answer: B
Explanation:
Section: Volume B
NEW QUESTION 100
Which of the following statements best describes the competency requirement for an auditor regarding fraud risks encountered in an engagement execution?
- A. The auditor is not expected to have any competency requirement regarding fraud since the role of investigating and detecting fraud belongs to other functions in the organization.
- B. The auditor should be able to have comparable competencies of a person whose primary responsibility is detecting and investigating fraud.
- C. The auditor must be able to have an appreciation of the fundamentals of fraud detection and investigation techniques.
- D. The auditor must have sufficient knowledge to evaluate the risk of fraud and the manner in which it is managed by the organization.
Answer: D
NEW QUESTION 101
A company has established its environmental audit activity as part of its legal department rather than part of its internal audit activity, which reports to the audit committee. The board has requested that the chief audit executive (CAE) provide an annual opinion on whether environmental risks are being properly addressed. In these circumstances, the CAE should recommend to the audit committee that the internal audit activity:
- A. Include a review of environmental issues in some internal audit engagements.
- B. Review the recommendations in all environmental audit reports.
- C. Discuss with the environmental auditors the results of their reviews.
- D. Periodically carry out a quality assessment of the environmental audit activity.
Answer: D
NEW QUESTION 102
A chief audit executive (CAE) of an international charity reports functionally to the audit committee of the board of directors and administratively to the charity's chief financial officer (CFO).
Which of the following would impair the internal audit function's independence?
- A. The CFO administers the annual evaluation process for the internal auditors.
- B. The CFO manages the accounting of the budget for the internal audit function.
- C. The CFO provides feedback on the CAE's audit reports.
- D. The CFO determines the scope of internal audit work in the accounting department.
Answer: D
Explanation:
Section: Volume E
Explanation/Reference:
NEW QUESTION 103
Which of the following is the responsibility of an internal auditor?
1. Assist operating management in implementing audit recommendations.
2. Provide management with value-added analysis to improve operations.
3. Become an advocate for changes to the internal audit activity charter.
4. Disclose non-financial risks that may be identified during the course of an engagement.
- A. 2 and 4 only
- B. 1, 2, 3, and 4
- C. 1, 2, and 4 only
- D. 1 and 3 only
Answer: A
Explanation:
Section: Volume D
NEW QUESTION 104
Which of the following roles, if undertaken by an internal auditor, would have the greatest potential for conflict with the Standards regarding objectivity?
- A. IT system designer.
- B. External audit liaison.
- C. Product development team consultant.
- D. Ethics advocate.
Answer: A
Explanation:
Section: Volume D
NEW QUESTION 105
Which of the following controls would most likely prevent the input of an unreasonable number of labor hours into a costing system?
- A. Consistency checks of data in input fields.
- B. Programmed limit tests of input fields.
- C. Reconciliation of input control totals.
- D. Recalculation tests during processing.
Answer: B
NEW QUESTION 106
According to IIA guidance, which of the following should be included in the internal audit charter?
- A. Organizational relationships and reporting lines.
- B. Identification of the organizational units where engagements are to be performed.
- C. The minimum resources and competencies needed for the internal audit activity.
- D. Assigned responsibilities for designing and implementing controls.
Answer: A
NEW QUESTION 107
An internal auditor is reviewing a new automated human resources system. The system contains a table of pay rates which are matched to the employee job classifications. The best control to ensure that the table is updated correctly for only valid pay changes would be to:
- A. Require that all pay changes be signed by the employee to verify that the change goes to a bona fide employee.
- B. Ensure that adequate edit and reasonableness checks are built into the automated system.
- C. Require a supervisor in the department, who does not have the ability to change the table, to compare the changes to a signed management authorization.
- D. Limit access to the data table to management and line supervisors who have the authority to determine pay rates.
Answer: C
NEW QUESTION 108
In publicly held companies, management often requires the internal audit activity's involvement with quarterly financial statements that are made public and used internally. Which of the following is generally not a reason for such involvement?
- A. Management may be concerned about potential penalties that could occur if quarterly financial statements are misstated.
- B. Management may perceive that having quarterly financial information examined by the internal auditors enhances its value for internal decision making.
- C. Management may be concerned about its reputation in the financial markets.
- D. The Standards state that internal auditors should be involved with reviewing quarterly financial statements.
Answer: D
Explanation:
Section: Volume A
NEW QUESTION 109
The primary reason that a bank would maintain a separate compliance function is to:
- A. Better manage perceived high risks.
- B. Ensure the independence of line and senior management.
- C. Strengthen controls over the bank's investments.
- D. Better respond to shareholder expectations.
Answer: A
Explanation:
Section: Volume A
NEW QUESTION 110
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