IIA-CIA-Part1 practice questions, page 36 of 47, with answer review and explanations.
Question 176
The chief commodity trader for a large energy company learns from a friend that a competitor will likely fail its upcoming regulatory audit and will be forced to temporarily decrease production. If the information is true, the trader has short-term opportunities to make trades that will financially benefit the trader's company and will lead to a substantial increase in the trader's performance bonus. However, if the information is not true, making the trades will significantly increase the company's risk of being caught in a long position. From an ethical perspective, which of the following would be the most appropriate course of action for the trader to take?
Make the trade because the company and the trader will both benefit.
Have another trader on staff make the trade in order to avoid a conflict of interest.
Disclose the information to the risk oversight committee but proceed with the trade to capitalize on the opportunity.
Defer the decision to management and risk the loss of the trading opportunity.
Question 177
The best reason for separating the cash-receiving function from the related record-keeping function is to:
Segregate cash payments from cash receipts.
Provide accountability for cash received.
Minimize misappropriations in cash receipts.
Improve physical security over the cash-receiving function.
Question 178
The main reason to establish internal controls in an organization is to:
Encourage compliance with policies and procedures.
Safeguard the resources of the organization.
Ensure the accuracy, reliability, and timeliness of information.
Provide reasonable assurance on the achievement of objectives.
Question 179
Which of the following is the primary concern of an internal auditor in a comprehensive audit of an organization?
Accuracy of reports on the source and use of funds.
Extent of achievement of the organization's mission.
Confirmation of compliance with policies and procedures.
Appropriateness of procedures related to the budgeting process.
Question 180
According to the Standards, which of the following must an internal auditor take into consideration when performing an assurance engagement of treasury operations? I. The audit committee has requested assurance of the treasury department's compliance with a new policy on the use of financial instruments. II. Treasury management has not instituted any risk management policies. III. Due to the recent sale of a division, the amount of cash and marketable securities managed by the treasury department has increased by 350 percent. IV. The external auditors have indicated some difficulties in obtaining account confirmations.