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CIA Questions Which standards expand upon the other categories of standards? A. Performance Standards B. Attribute Standards C. Implementation Standards D. All of the choices are correct correct answer C. Implementation Standards The purpose of the internal audit activity can be best described as? A. Adding value to the organization B. Providing additional assurance regarding fair presentation of financial statements C. Expressing an opinion on the adequate design and functioning of the system of internal control D. Assuring the absence of any fraud that would materially affect the financial statements. correct answer A. Adding value to the organization The standards consist of three types of standards. Which standards apply to the characteristics of providers of internal auditing services? A. Implementation Standards
B. Performance Standards C. Attribute Standards D. Independence Standards correct answer C. Attribute Standards A Formal code of ethics should do all of the following except A. Effectively communicate acceptable values to all members B. Communicate the organization's values system to outsiders. C. Reflect only legal standards of conduct for individuals and the organization. D. Provide a method of policing and disciplining members of the organization for violations. correct answer C. Reflect only legal standards of conduct for individuals and the organization. Objectivity is an ethical requirement for all persons engaged in the professional practice of internal auditing. One aspect of objectivity requires? A. Performance of professional duties in accordance with relevant laws B. Avoidance of conflict of interest C. Refraining from using confidential information for unethical or illegal advantage D. Maintenance of an appropriate level of professional expertise correct answer B. Avoidance of conflict of interest
A. Seek counsel from an independent attorney to determine the personal consequences of potential action. B. Take action consistent with the principles embodied the IIA's code of ethics. C. Seek the counsel of the audit committee before deciding on an action D. Act consistently with the employing organization's code of ethics even if such action would not be consistent with the IIA's code of ethics. correct answer B. Take action consistent with the principles embodied the IIA's code of ethics. Which situation is most likely a violation of the IIA's code of ethics? A. Reporting apparent violations of antitrust statutes by officers to the government regulators B. Cooperating with the government's criminal investigation of the organization C. Reporting apparent violations of antitrust statues by officers to the board of directors. D. Immediately reporting a violet crime observed at work to local law enforcement agencies correct answer A. Reporting apparent violations of antitrust statutes by officers to the government regulators The IIA's code of ethics requires internal auditors to perform their work with A. Honesty, Diligence, and responsibility B. Timeliness, sobriety, and clarity
C. Knowledge, skills, and competencies D. Punctuality, objectivity, and responsibility correct answer A. Honesty, Diligence, and responsibility Which of the following situations is a violation of the IIA's code of ethics? A. An internal auditor, with the knowledge and consent of management accepted a token gift from a customer of the organization that was not presumed to impair and did not impair judgement B. Knowing that management was aware of the situation, an internal auditor purposely left a description of an unlawful practice out of the final engagement communication C. An internal auditor shared techniques with internal auditors form another organization D. Based upon knowledge of the probable success of the employer's business, an internal auditor invested in a mutual fund that specialized in the same industry correct answer B. Knowing that management was aware of the situation, an internal auditor purposely left a description of an unlawful practice out of the final engagement communication Which of the following concurrent occupation could appear to subvert the ethical behavior of an internal auditor? A. Internal auditor and a well-known charitable organization's local in-house chairperson B. Internal auditor and part-time business insurance broker C. Internal auditor and adjunct faculty member of a local business college that educates potential employees.
D. Disclose material facts know to the internal auditor that could distort the final engagement communication if not revealed. correct answer D. Disclose material facts know to the internal auditor that could distort the final engagement communication if not revealed. Which of the following actions taken by a chief audit executive (CAE) could be considered professionally ethical under the IIA's code of ethics? A. The CAE decides to delay an engagement at a branch so that his nephew, the branch manager, will have time to clean things up B. To save organizational resources, the CAE cancels all staff training for the next 2 years on the basis that all staff are too new to benefit from training C. To save organizational resources, the CAE limits procedures at foreign branches to confirmations form branch managers that no major personnel changed have occurred. D. The CAE refused to provide information about organizational operations to his father, who is a part owner. correct answer D. The CAE refused to provide information about organizational operations to his father, who is a part owner. An internal auditor is performing services in a division in which the chief financial officer is a close personal friend, and the internal auditor learns that the friend is to be replaced after a series of critical labor negotiations. The internal auditor replays this information to the friend. Has a violation of the IIA's code of ethics occurred? A. No. The use of confidential information resulted in no personal gain to the internal auditor B. No. The internal auditor was just being honest with his or her friend C. Yes. The internal auditor had a conflict of interest with the organization
D. Yes. The internal auditor was not prudent in the use of information acquired in the course of his or her duties correct answer D. Yes. The internal auditor was not prudent in the use of information acquired in the course of his or her duties Under the IIA's code of ethics, an entity that provides internal auditing services is specifically required to A. Maintain certain predetermined staffing requirements for engagements B. Comply with the international standards for the professional practice of internal auditing C. Comply with organizational policy D. Participate in a formal continuing education program correct answer B. Comply with the international standards for the professional practice of internal auditing As new staff internal auditor was told to perform an engagement in an area with which the internal auditor was not familiar. Because of time constraints, no supervision was provided. The assignment represented a good learning experience, but the area was clearly beyond the internal auditor's competence. Nonetheless, the internal auditor prepared comprehensive working papers and communicated the results to management. In this situation, A. The internal audit activity violated the standards by hiring an internal auditor without proficiency in the area B. The internal audit activity violated the standards by not providing adequate supervision C. The chief audit executive has not violated the IIA's code of ethics because it does not address supervision
D. The board and the chief financial officer correct answer C. Management and the board The chief audit executive (CAE) is best defined as the A. Inspector general B. Person responsible for the internal audit function C. Outside provider of internal audit services D. Person responsible for overseeing the contract with the outside provider of internal audit services. correct answer B. Person responsible for the internal audit function Which one of the following must be included in the internal audit charter? A. Internal audit objectivity B. Internal audit responsibility C. Chief audit executive's compensation plan D. Number of full-time internal audit employees deemed to be the necessary minimum correct answer B. Internal audit responsibility The chief audit executive meets with the members of the internal audit activity at scheduled staff meetings. Which of the following is the most appropriate function of such a staff meeting? A. developing the engagement work schedule
B. Revising travel promotion, and compensation policies C. Explaining administrative policies and obtaining suggestion from the staff D. Developing long-range training programs that will meet the staff's needs. correct answer C. Explaining administrative policies and obtaining suggestion from the staff A typical code of ethical conduct for financial managers or management accountants in an organization requires all of the following except A. Integrity and a refusal to compromise professional values for the sake of personal goals B. Independence from conflicts of economic interest C. Independence form the conflicts of economic interest D. Subjectivity in presenting information, preparing reports, and making analyses. correct answer D. Subjectivity in presenting information, preparing reports, and making analyses. To determine the organizational placement of internal audit, the CAE
- works with the board
- works with senior management
- Has discretion to independently determine placement A. 1 only B. 2 only
D. CEO or equivalent correct answer CEO or equivalent Assessing individuals objectivity of internal auditors is the responsibility of A. The chief executive officer B. The board C. The audit committee D. The chief audit executive correct answer D. The chief audit executive Which of the following actions is required of the CAE in regard to the objectivity of internal auditors? A. Maximize B. Prioritize C. Minimize D. Assess correct answer D. Assess Internal auditors should be objective. Objectivity... A. Requires internal auditors not to subordinate their judgement on audit matters to that of others.
B. Is required only in assurance engagements. C. Is freedom from threats to the ability to perform audit work without bias. D. Prohibits internal auditors from providing consulting services relating to operations for which they had previous responsibility. correct answer A. Requires internal auditors not to subordinate their judgement on audit matters to that of others. An internal auditor has recently received an offer form the manager of the marketing department of a weekend's free use of his beachfront condominium. No engagement is currently being conducted in the marketing department, and none is scheduled. The internal auditor A. Should reject the offer and report it to the appropriate supervisor B. May accept the offer because its value is immaterial C. May accept the offer because no engagement is being conducted. D. May accept the offer if approved by the appropriate supervisor. correct answer A. Should reject the offer and report it to the appropriate supervisor The internal audit activity should be free to audit and report on any activity that also reports to its administrative head if it considers such a coverage to be appropriate for its audit plan. Any limitation is scope or reporting of results of these activities should be brought to the attention of the A. CEO B. CFO
collectively have the knowledge and skills needed to perform the responsibilities of the internal audit activity. Internal auditors must possess the knowledge, skills, and others competencies essential to the performance of their individual responsibilities. Consequently, all internal auditors should be competent with regard to A. Operating within the organization's framework for governance, risk management, and control. B. Evaluating investments in securities C. Applying management principles at the operational level D. Performing structured systems analysis correct answer A. Operating within the organization's framework for governance, risk management, and control. Which one of the following is responsible for determining the appropriate levels of education and experience needed for the internal audit staff? A. Human resource manager B. CAE C. CEO D. CFO correct answer B. CAE At a minimum, how often should the skills of internal audit staff be assessed?
A. Annually B. Every 5 years C. Quarterly D. Semi-annually correct answer A. Annually All of the following will help the CAE identify the available knowledge, skills, and competencies of the internal audit staff except A. Hiring practices B. Periodic skills assessment C. External services provider D. Staff performance appraisals correct answer C. External services provider An internal auditor judged an item to be immaterial when planning an assurance engagement may still include the item if it is subsequently determined that A. Sufficient staff is available B. Adverse effects related to the item are likely to occur C. Related information is reliable
D. Testing in sufficient detail to give absolute assurance that noncompliance does not exist correct answer C. Consideration of the possibility of material irregularities during every engagement Assessment of a quality assurance and improvement program should include evaluation of all the following except A. Adequacy of the oversight of the work of external auditors B. Conformance with the standards of code of ethics C. Adequacy of the internal audit activity's charter D. Contribution to the organization's governance processes. correct answer A. Adequacy of the oversight of the work of external auditors The internal audit activity's quality assurance and improvement program is the responsibility of A. External auditors B. CAE C. the board D. the audit committee correct answer B. CAE An external assessment of an internal audit activity contains an expressed opinion. The opinion may apply
A. Only to the internal audit activity's conformance with the standards B. Only to the effectiveness of the internal auditing coverage C. Only to the adequacy of internal control D. To conformance with the standards and assessment for each standard correct answer D. To conformance with the standards and assessment for each standard As part of a quality program, internal assessment teams most likely will examine which of the following to evaluate the quality of engagement planning and documentation for individual engagements? A. Measures of project budgets and audit plan completion B. Project assignment documentation C. Weekly status reports D. The long -range engagement work schedule. correct answer A. Measures of project budgets and audit plan completion At what minimal required frequency does CAE executive report the results of internal assessments in the form of ongoing monitoring to senior management and the board? A. Monthly B. Quarterly
