IIA-CIA-Part1

IIA-CIA-Part1 practice questions, page 43 of 47, with answer review and explanations.

Question 211

Which of the following reporting relationships results in the greatest impairment to the independence of the chief audit executive (CAE)?

  1. The CAE reports administratively and functionally to the president.
  2. The CAE reports administratively to the president and functionally to the board.
  3. The CAE reports administratively to the chief financial officer and functionally to the president.
  4. The CAE reports administratively to the audit committee and functionally to the chief operating officer.

Question 212

An employee who recently transferred into the internal audit activity has been assigned to audit the accounts payable system. Which function, if previously performed by this employee, would represent a conflict of interest?

  1. Monitoring the allowance for doubtful accounts.
  2. Writing procedures for the handling of duplicate payments.
  3. Signing timekeeping cards for subordinates.
  4. Reviewing shipping documents for accuracy.

Question 213

A company's chief audit executive determines that the internal audit staff does not have the requisite skills to conduct an audit of the financial derivatives area. Which of the following actions would be the least acceptable?

  1. Notify the audit committee of the problem and consult with them regarding outsourcing the audit engagement to a qualified external auditing firm.
  2. Determine the requisite knowledge needed and obtain the proper training for auditors if such training is available within the appropriate time framework outlined by the audit committee.
  3. Notify the audit committee of the problem and assign the most competent auditors to perform the audit engagement.
  4. Employ the skills of a financial derivatives expert to consult on the project, and supplement the consulting with a local seminar on financial derivatives.

Question 214

During an audit engagement in an insurance company, an internal auditor discovered that senior management had purposely misclassified $200, 000 in assets on financial statements submitted to regulatory authorities in order to avoid significant statutory penalties. To remain in compliance with the IIA Code of Ethics, what would be the most appropriate action for the auditor to take?

  1. Note the situation in the workpapers and inform the chief executive officer.
  2. Send an informative memo to the external auditors.
  3. Discuss the matter with audit management and ensure that the audit committee is informed.
  4. Report the matter to regulatory authorities since senior management is implicated.

Question 215

During an audit of financial contracts, an internal auditor learns that a relative has a substantial loan with the organization. The auditor should:

  1. Exclude the relative's information from the audited work and proceed with the audit engagement.
  2. Proceed with the audit engagement but disclose in the engagement final communication that the relative is a customer.
  3. Immediately withdraw from the audit engagement.
  4. Notify management and the chief audit executive (CAE) and have the CAE determine whether the auditor should continue with the audit engagement.