Dumps Cafe IIA-IIA-CIA-Part1

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Essentials of Internal
Auditing
Version: Demo
[ Total Questions: 10]
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IIA
IIA-CIA-Part1
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Category Breakdown
Category Number of Questions
Foundations of Internal Auditing 4
Proficiency and Due Professional Care 2
Independence and Objectivity 4
TOTAL 10
Exam Topic Breakdown
Exam Topic Number of Questions
Topic 3 : Exam Pool C 2
Topic 5 : Exam Pool E 2
Topic 6 : Exam Pool F 2
Topic 2 : Exam Pool B 2
Topic 1 : Exam Pool A 2
Topic 4 : Exam Pool D 0
TOTAL 10
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Topic 3, Exam Pool C
Question #:1 - - [Foundations of Internal Auditing](Exam Topic 3)
According to IIA guidance, which of the following actions best demonstrates that due professional care has 
been considered by the internal audit activity when conducting a review of an organization's assets?
Determining whether any opportunity exists for senior executives to misappropriate property or funds
Planning and executing fieldwork In a complete and timely manner to identify all significant risks
Verifying whether the board of directors has implemented effective internal controls
Having senior management determine whether the degree of work planned is sufficient to meet 
engagement objectives
Answer: B
Explanation
Demonstrating due professional care in internal auditing involves thorough planning and executing audit 
procedures that are appropriate to the scope and objectives of the audit. Option B, planning and executing 
fieldwork in a complete and timely manner to identify all significant risks, best demonstrates due professional 
care by ensuring that all relevant risks associated with the organization's assets are identified and addressed. 
This approach aligns with IIA standards that require auditors to apply knowledge, skills, and experience 
appropriately in providing assurance services.
IIA Standard 2200: "Due Professional Care"
Question #:2 - - [Foundations of Internal Auditing](Exam Topic 3)
According to IIA guidance, which of the following would the internal audit activity examine in order to 
evaluate the organization's governance process for strategic and operational decisions'?
The risk assessment process including interviews with senior management.
The organization’s mission and value statements, code of conduct, and whistleblowing policy
Board meeting minutes the board policy manual, and past audit reports
Staff compensation objective setting and the performance evaluation policy and process
Answer: C
Explanation
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The first step for a newly hired chief audit executive (CAE) to build and maintain the proficiency of the 
internal audit activity should be to incorporate the basic criteria of internal audit competency into job 
descriptions. This foundational step ensures that all current and future hires are aligned with the required 
skills and competencies needed for effective internal audit functions. It sets a clear expectation of skills and 
knowledge right from the recruitment stage, thereby facilitating the development and maintenance of a 
competent audit team.
The Institute of Internal Auditors (IIA) - Practice Guides on Talent Management
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A. 
B. 
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Topic 5, Exam Pool E
Question #:3 - - [Proficiency and Due Professional Care](Exam Topic 5)
The internal audit activity was asked to conduct an investigation for potential fraud in the treasury department 
and subsequently contracted with a forensic accountant to join the team for the engagement. Which of the 
following parties has the primary responsibility for resolving any fraud incidents found as a result of this 
investigation?
Chief audit executive.
Senior management.
The forensic accountant.
The legal department.
Answer: B
Explanation
Senior management has the primary responsibility for resolving any fraud incidents found as a result of the 
investigation in the treasury department. While the internal audit activity may identify and report on fraud, 
and forensic accountants may assist in investigating it, the responsibility for addressing and resolving 
incidents of fraud, including implementing corrective actions and holding parties accountable, rests with 
senior management.
The IIA’s guidance on the roles and responsibilities in fraud investigations, which places ultimate 
responsibility for management of fraud risks with senior management.
Question #:4 - - [Independence and Objectivity](Exam Topic 5)
In its five years of existence, an internal audit activity conducted a single internal assessment of its quality 
assurance and improvement program (QAIP). The results of that assessment showed that the internal audit 
activity did not conform with the Standards. Prior to this, an external assessment of the internal audit activity's 
QAIP was conducted, which reported that the internal audit activity was in conformance with the Standards. 
Considering the two assessments, what would be the internal audit activity's current state of conformance with 
the Standards?
Conformance with the Standards.
Nonconformance with the Standards
Unable to determine conformance with the Standards.
Partial conformance with the Standards
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Answer: B
Explanation
The current state of conformance with the Standards for the internal audit activity would be considered as 
"Nonconformance with the Standards." This assessment is based on the most recent internal assessment, 
which showed nonconformance. According to IIA standards, the results of the latest quality assurance review 
are critical in determining conformance, and any finding of nonconformance indicates that the internal audit 
activity currently does not meet the Standards, despite previous external assessments to the contrary.
IIA Standard 1300: Quality Assurance and Improvement Program and related interpretation guidelines.
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A. 
B. 
C. 
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Topic 6, Exam Pool F
Question #:5 - - [Independence and Objectivity](Exam Topic 6)
The board requested the chief audit executive (CAE) to provide consulting services for a new systems 
implementation project Which of the following statements is true regarding this scenario?
The CAE should avoid making decisions on risk responses within risk management processes.
The CAE may only provide consulting and not assurance services in risk management processes
The CAE may manage the project risks on behalf of management in this particular situation
The CAE should avoid giving assurance on risk management processes in this particular situation
Answer: A
Explanation
In the scenario where the board requests the chief audit executive (CAE) to provide consulting services for a 
new systems implementation project, the CAE should avoid making decisions on risk responses within risk 
management processes. TheCAE’s role is to provide independent and objective assurance and consulting 
services. Making decisions on risk responses would impair the CAE's independence and objectivity, which 
are crucial for the internal audit function. Instead, the CAE can provide advice and recommendations on risk 
management practices while ensuring that management retains responsibility for decision-making.
The IIA Standards: Standard 1112 – Chief Audit Executive Roles Beyond Internal Auditing: "If the CAE has 
or is expected to have roles and/or responsibilities that fall outside of internal auditing, safeguards must be in 
place to limit impairments to independence or objectivity."
The IIA Practice Guide: "Independence and Objectivity": Discusses the importance of maintaining 
independence and objectivity in consulting engagements.
Question #:6 - - [Foundations of Internal Auditing](Exam Topic 6)
Which of the following best illustrates the principle of due professional care?
The internal audit activity uses key performance indicators for all staff members after all audit 
engagements.
The internal auditors provide assurance to third parties indicating that their work was properly 
supervised.
The internal auditors demonstrate they have an understanding of engagement objectives and scope.
The internal auditors are heavily involved in training and development to enhance their skills.
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Answer: C
Explanation
Due professional care requires internal auditors to understand the engagement objectives and scope fully, 
ensuring their work is thorough and appropriate for the given situation. It involves exercising appropriate 
diligence and professionalism during audits. References:
IIA Standard 1220: Due Professional Care.
IIA Practice Guide: Demonstrating Due Professional Care.
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A. 
B. 
C. 
D. 
A. 
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Topic 2, Exam Pool B
Question #:7 - - [Foundations of Internal Auditing](Exam Topic 2)
Which of the following describes a primary responsibility for the internal audit activity in helping 
management maintain effective controls?
Promoting continuous evaluation
Promoting continuous monitoring
Promoting continuous improvement
Promoting continuous reporting
Answer: B
Explanation
The primary responsibility for the internal audit activity in helping management maintain effective controls is 
promoting continuous monitoring. Continuous monitoring involves regularly reviewing control processes and 
performance to ensure they are effective and making adjustments as necessary. This proactive approach 
enables the internal audit activity to assist management in maintaining a robust control environment that can 
adapt to changes in the organization or its external environment.
The IIA's International Standards for the Professional Practice of Internal Auditing regarding monitoring and 
control.
Question #:8 - - [Proficiency and Due Professional Care](Exam Topic 2)
An organization’s senior management team is awarding substantial bonuses if employees meet financial 
targets. Which of the following motivators to potentially commit fraud would become most likely in this 
scenario?
Opportunity
Pressure
Rationalization
Justification
Answer: B
Explanation
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In a scenario where substantial bonuses are tied to meeting financial targets, the most likely motivator to 
potentially commit fraud is "Pressure." The incentive structure creates a high-pressure environment for 
employees to meet financial targets, potentially encouraging unethical behavior to achieve these goals to 
receive bonuses.
References: Fraud risk factors as outlined by auditing standards such as those from the AICPA or IIA
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A. 
B. 
C. 
D. 
A. 
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D. 
Topic 1, Exam Pool A
Question #:9 - - [Independence and Objectivity](Exam Topic 1)
Which of the following scenarios would most significantly restrict the areas where internal audit could 
perform assurance services?
Regulators mandate specific audit engagements to be included in the audit plan.
The internal audit activity reports functionally to the chief financial officer
The internal audit activity reports administratively to the CEO and functionally to the audit committee.
The internal audit activity reports administratively to the chief financial officer.
Answer: D
Explanation
The scenario that would most significantly restrict the areas where internal audit could perform assurance 
services is if the internal audit activity reports administratively to the chief financial officer (CFO). Reporting 
to the CFO could impair the perceived independence of the internal audit activity because the CFO is 
typically responsible for the financial and operational aspects of the organization that internal audit frequently 
assesses. This relationship could create a conflict of interest and limit the scope of audits that can be 
performed impartially.
The Institute of Internal Auditors (IIA) - International Standards for the Professional Practice of Internal 
Auditing
Question #:10 - - [Independence and Objectivity](Exam Topic 1)
Which requirement should the chief audit executive consider when communicating results of the quality 
assurance and improvement program to the board of a large
organization?
The internal assessment results should be discussed once every five years,
The rating conclusions and the impact from results of the external assessment should be explained,
The results of the external assessment should be discussed every seven years,
The qualifications and independence of the internal assessment team should be discussed
Answer: B
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Explanation
The chief audit executive should consider explaining the rating conclusions and the impact of the results from 
the external assessment when communicating the results of the quality assurance and improvement program 
to the board. This is crucial as it directly relates to the effectiveness and efficiency of the internal audit 
function, providing key insights into the internal audit's performance and its compliance with established 
standards and practices.
IIA's International Standards for the Professional Practice of Internal Auditing.
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Topic 4, Exam Pool D
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