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NEW QUESTION 87
A receiving department receives copies of purchase orders for use in identifying and recording inventory receipts.
The purchase orders list the name of the vendor and the quantities of the materials ordered.
A possible error that this system could allow is:
- A. Payment for unauthorized purchases.
- B. Overpayment for partial deliveries.
- C. Payment to unauthorized vendors.
- D. Delay in recording purchases.
Answer: B
Explanation:
Section: Volume C
NEW QUESTION 88
If management has not established a risk management process, the internal audit activity could:
- A. Assume responsibility for the management of identified risks.
- B. Take a proactive role that supplements traditional assurance activities.
- C. Identify and mitigate risks to the organization.
- D. Assume primary responsibility for determining if adequate and effective processes are in place.
Answer: B
NEW QUESTION 89
Which of the following situations would most likely result in the auditor in charge (AIC) recommending that the staff auditor further investigate non-compliant items?
- A. A staff auditor conducted a test of 25 non-statistical sample items, selected judgmentally, and 5 are not in compliance with organizational policy.
- B. A staff auditor conducted a test of 85 non-statistical sample items, selected randomly, and 5 are not in compliance with organizational policy.
- C. A staff auditor conducted a test of statistical sample items, the results of which fall below the acceptable error rate by less than one percentage point.
- D. Before the staff auditor conducted a test of statistical sample items, the AIC was already aware of underlying control weaknesses.
Answer: A
Explanation:
Section: Volume D
NEW QUESTION 90
An internal auditor is designing a sampling plan to test the accuracy of daily production reports over the past three years. All of the reports contain the same information except that Friday reports also contain weekly totals and are prepared by managers rather than by supervisors. Production normally peaks near the end of a month.
If the auditor wants to select two reports per month using an interval sampling plan, which of the following techniques reduces the likelihood of bias in the sample?
- A. Using multiple random starts.
- B. Increasing the confidence level.
- C. Estimating the error rate in the population.
- D. Increasing the precision.
Answer: A
Explanation:
Section: Volume C
NEW QUESTION 91
Which of the following is a role of the board of directors in the governance process?
- A. Review and approve operational goals and objectives.
- B. Conduct periodic assessments of the organization's governance systems.
- C. Implement an effective system of internal controls to support the organization's governance systems.
- D. Obtain assurance concerning the effectiveness of the organization's governance systems.
Answer: D
Explanation:
Section: Volume A
NEW QUESTION 92
According to IIA guidance,which of the following are considerations of due professional
care when an internal auditor conducts a formal consulting engagement?
1.The complexity of the work required.
2.The needs and expectations of the client.
3.The potential value of the engagement compared to the effort.
4.Information regarding assumptions and procedures to be employed.
- A. 1,2,3,and 4
- B. 2 and 3 only
- C. 1 and 4 only
- D. 1,2,and 3 only
Answer: D
NEW QUESTION 93
Which of the following statements correctly describes how workpaper standards can improve the efficiency of internal audit operations?
- A. They mandate the workpaper retention period.
- B. They require supervisors to provide written confirmation of the workpapers they review.
- C. They grant external parties approved by management access to workpapers.
- D. They allow the design and content to vary depending on the nature of the engagement.
Answer: D
NEW QUESTION 94
Which of the following would provide the best assessment of an organization's ethical climate?
- A. Number of years that directors have been appointed to the board.
- B. Clarity and consistency of consequences imposed by the board of directors for ethical violations.
- C. Evidence of training provided to the board of directors on ethical issues.
- D. Frequency of fraud reported and results of subsequent investigations.
Answer: B
NEW QUESTION 95
Which of the following would not be a red flag for fraud?
- A. New employees occasionally fail to meet established project deadlines due to staffing shortages.
- B. A weak control environment has been accepted by management to encourage creativity.
- C. Several recent, large expenditures to a new vendor have not been documented.
- D. A manager has bragged about multiple extravagant vacations taken within the last year, which are excessive relative to the manager's salary.
Answer: A
Explanation:
Section: Volume E
NEW QUESTION 96
Which of the following techniques would provide the most compelling evidence that a safety hazard exists within a manufacturing facility?
- A. Review of records involving safety violations,filed by facility production employees.
- B. Observation of the facility during operations.
- C. Analysis of facility operating reports,focusing on instances when breakdowns occurred.
- D. Questioning of facility management,including the facility safety officer.
Answer: B
NEW QUESTION 97
According to the IIA guidance, who is responsible for periodically assessing the internal audit activity?
- A. The board.
- B. Senior management.
- C. The chief audit executive.
- D. The external auditors.
Answer: C
NEW QUESTION 98
How should management obtain assurance that employees are complying with the organization's security policy?
- A. Routinely survey staff so that information related to security practices can be submitted anonymously.
- B. Enforce a policy that requires all employees to sign a statement that they will adhere to the organization's security policies.
- C. Regularly conduct independent reviews of employees' security practices.
- D. Rely on exception reports to identify errors.
Answer: C
NEW QUESTION 99
During the planning phase of an audit, an internal auditor preliminarily concluded that the controls for a process were adequately designed to manage the associated risk. Under what conditions might this preliminary assessment subsequently prove to be unreliable?
- A. Process controls were not developed from an existing key control checklist.
- B. Compensating controls from other processes were not present.
- C. Redundant controls are not in place to enhance well designed controls.
- D. Entity level controls are informal and not consistently enforced.
Answer: D
Explanation:
Section: Volume D
NEW QUESTION 100
A company produces a product that consists of materials X, Y, and Z.
The product is mixed so that:
- The quantity of material X used is one-third more than that of material Y.
- The quantity of material Y used is one-fourth less than that of material Z.
If the company used 24,000 units of material Z during a period, what is a reasonable estimate of the amount of material X used?
- A. 32,000
- B. 18,000
- C. 24,000
- D. 8,000
Answer: C
NEW QUESTION 101
Which of the following audit activities is within the scope of assurance activities as stated in the International Professional Practices Framework?
- A. Perform an evaluation of management's planning process.
- B. Participate in negotiations for a corporate acquisition.
- C. Assess financing alternatives for a new generator.
- D. Review a make-or-buy decision and report a recommendation to management for approval.
Answer: A
Explanation:
Section: Volume A
NEW QUESTION 102
Which of the following is not an appropriate role of the internal audit activity in governance activities?
- A. Support the board in enterprise-wide risk assessment.
- B. Monitor compliance with the organization's ethics policies.
- C. Discuss areas of significant risk.
- D. Ensure the timely implementation of audit recommendations.
Answer: D
Explanation:
Section: Volume B
NEW QUESTION 103
Which of the following is the best way to detect fraud?
- A. Conduct anti-fraud training.
- B. Perform background investigations.
- C. Implement process controls.
- D. Activate a whistleblower hotline.
Answer: D
NEW QUESTION 104
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