CIA Part 1...
Q1 . According to the IIA Standards, which of the following is not included in the scope of the internal audit function?
a. Appraising the effectiveness and efficiency of operations and programs.
b. Reviewing the strategic management process,
assessing the quality of management decision
making both quantitatively and qualitatively and
reporting the results to the audit committee.
c. Reviewing the means of safeguarding assets.
d. Complying with the laws, regulations, policies, procedures,
and contracts.
Q2. An internal auditor is auditing the financial operations
of an organization. Which of the following is not
specified by the IIA Standards for inclusion in the scope
of the audit?
a. Reviewing the reliability and integrity of financial and
operational information.
b. Reviewing the compliance with laws, regulations,
policies, procedures, and contracts.
c. Appraising the effectiveness and efficiency of operations
and programs.
d. Reviewing the financial decision-making process.
Q3. The audit committee of an organization has charged the
chief audit executive (CAE) with bringing the department
into full compliance with the IIA Standards. The
CAE’s first task is to develop a charter. Identify the item
that should be included in the statement of objectives:
a. Report all audit findings to the audit committee every
quarter.
b. Notify governmental regulatory agencies of unethical
business practices by organization management.
c. Determine the adequacy and effectiveness of the
organization’s systems of internal controls.
d. Submit departmental budget variance reports to
management every month.
Q4. In which of the following situations does the auditor
potentially lack objectivity?
a. An auditor reviews the procedures for a new electronic
data interchange connection to a major customer
before it is implemented.
b. A former purchasing assistant performs a review
of internal controls over purchasing four months
after being transferred to the internal auditing
department.
c. An auditor recommends standards of control and
performance measures for a contract with a service
organization for the processing of payroll and
employee benefits.
d. A payroll accounting employee assists an auditor in
verifying the physical inventory of small motors.
Q5. Which of the following actions would be a violation
Of auditor independence?
a. Continuing on an audit assignment at a division
for which the auditor will soon be responsible as
the result of a promotion.
b. Reducing the scope of an audit due to budget
restrictions.
c. Participating on a task force which recommends
standards for control of a new distribution system.
d. Reviewing a purchasing agent’s contract drafts prior
to their execution.
Q6. The IIA’s Code of Ethics includes which of the following
two essential components?
a. Definition of internal auditing and administrative
directives.
b. Principles and Rules of Conduct.
c. Integrity and objectivity.
d. Confidentiality and competency.
Q7. A Certified Internal Auditor (CIA) is working in a non–
internal audit position as the director of purchasing. The
CIA signs a contract to procure a large order from the
supplier with the best price, quality, and performance.
Shortly after signing the contract, the supplier presents
the CIA with a gift of significant monetary value. Which
of the following statements regarding the acceptance
of the gift is correct?
a. Acceptance of the gift would be prohibited only if it
were noncustomary.
b. Acceptance of the gift would violate the IIA Code
of Ethics and would be prohibited for a CIA.
c. Since the CIA is no longer acting as an internal auditor,
acceptance of the gift would be governed only
by the organization’s code of conduct.
d. Since the contract was signed before the gift was
offered, acceptance of the gift would not violate
either the IIA Code of Ethics or the organization’s
code of conduct.
Q8. An auditor, nearly finished with an audit, discovers that
the director of marketing has a gambling habit. The
gambling issue is not directly related to the existing
audit, and there is pressure to complete the current
audit. The auditor notes the problem and passes the
information on to the chief audit executive but does
no further follow-up. The auditor’s actions would:
a. Be in violation of the IIA Code of Ethics for withholding
meaningful information.
b. Be in violation of the Standards because the auditor
did not properly follow-up on a red flag that might
indicate the existence of fraud.
c. Not be in violation of either the IIA Code of Ethics
or the Standards.
d. Both a and b.
Q9. As used by the internal auditing profession, the IIA
Standards refer to all of the following except:
a. Criteria by which the operations of an internal audit
department are evaluated and measured.
b. Criteria which dictate the minimum level of ethical
actions to be taken by internal auditors.
c. Statements intended to represent the practice of
internal auditing, as it should be.
d. Criteria that is applicable to all types of internal audit
departments.
Q10. Which of the following situations would be a violation
of the IIA Code of Ethics?
a. An auditor was subpoenaed in a court case in which
a merger partner claimed to have been defrauded
by the auditor’s company. The auditor divulged confidential
audit information to the court.
b. An auditor for a manufacturer of office products
recently completed an audit of the corporate
marketing function. Based on this experience, the
auditor spent several hours one Saturday working
as a paid consultant to a hospital in the local area,
which intended to conduct an audit of its marketing
function.
c. An auditor gave a speech at a local IIA chapter meeting
outlining the contents of a program the auditor
had developed for auditing electronic data interchange
connections. Several auditors from major
competitors were in the audience.
d. During an audit, an auditor learned that the
company was about to introduce a new product
that would revolutionize the industry. Because
of the probable success of the new product, the
product manager suggested that the auditor buy
additional stock in the company, which the auditor
did.
Q11. In applying the standards of conduct set forth in the
Code of Ethics, internal auditors are expected to:
a. Exercise their individual judgment.
b. Compare them to standards in other professions.
c. Be guided by the desires of the auditee.
d. Use discretion in deciding whether to use them or
not.
Q12. Reinforcing the Code of Conduct and ethical behavior
standards for all internal auditors can protect which of
the following?
a. Business risk.
b. Audit failures.
c. Audit false assurance.
d. Audit reputation risk.
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