IIA-CHAL-QISA Best Training Material and Practice Test Q&A from CertLibrary.com

Question 1

Which of the following would most likely appear in the engagement workpapers?

A. Copies of all source documents audited.
B. The name of the internal auditor who reviewed the work.
C. A copy of the most recent financial statements.
D. The board’s response to key findings.

Answer : B

Question 2

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?

A. The risk assessment process, including interviews with senior management.
B. The organization’s mission and value statements, code of conduct, and whistleblowing policy.
C. Board meeting minutes, the board policy manual, and past audit reports.
D. Staff compensation, objective setting, and the performance evaluation policy and process.

Answer : C

Question 3

In which of the following scenarios is the internal auditor in conformance with The IIA’s Code of Ethics and the Standards?

A. The auditor testifies in front of a jury about an organization’s fraudulent financial practices after receiving a subpoena.
B. Management has agreed to remedy a significant control deficiency, so the auditor excludes the deficiency from the engagement report.
C. The chief audit executive declines an assurance engagement in IT because the internal audit activity is not proficient in IT.
D. The auditor communicates an audit opinion on fraud risk during an audit engagement’s preliminary fraud risk assessment.

Answer : C

Question 4

Which of the following is a disadvantage of using flowcharts during a risk assessment?

A. People cannot quickly understand the processes via flowcharts.
B. Flowcharts are not applicable for evaluating the design of controls.
C. Some serious risks that are not part of the linear process can be missed.
D. Flowcharts do not enable auditors to identify missing controls.

Answer : C

Question 5

Which of the following disclosures must the chief audit executive (CAE) include when communicating the results of the quality assurance and improvement program to senior management and the board?

A. Authority and responsibility of the internal audit activity.
B. Hours and sources of continuing professional education.
C. Scope and frequency of both the internal and external assessments.
D. Independence and objectivity impairments of the CAE.

Answer : C

Question 6

Which of the following types of organizational structures is most appropriate for a high-fashion clothing manufacturer facing heavy competition and dynamic customer demand?

A. Centralized
B. Functional
C. Mechanistic.
D. Organic.

Answer : D

Question 7

During a review to verify the organization’s compliance with relevant health, safety, and environmental regulations, an internal auditor noted that waste oil was not being stored and safeguarded as required. The auditor captured evidence of this on his mobile phone. How should this evidence be handled?

A. The internal auditor should ensure the phone is password protected to restrict access to the evidence.
B. The pictures should be sent to relevant regulatory authorities as evidence of the breach.
C. The internal auditor should transfer the pictures to the chief audit executive to be filed as evidence.
D. The pictures should be sent to the CEO and senior management as evidence of the breach.

Answer : C

Question 8

The largest risks facing an organization should be mitigated by which type of controls?

A. Entity-level.
B. Activity-level.
C. Transaction-level.
D. Process-level.

Answer : A

Question 9

Which of the following would be a red flag for potential issues in the control environment?

A. Segregation of duties during preparation of the financial statements.
B. Compensation structures that are based on commissions.
C. Allow rate of turnover in key financial positions.
D. The presence of a whistleblower policy and fraud hotline.

Answer : B

Question 10

An internal auditor noted that the organization’s production facility experienced a machinery outage, because routine machinery maintenance was not performed timely. Senior management asked the auditor why the maintenance was delayed, and the auditor did not have an answer. Which of the following tools or approaches should the auditor have used to help him better understand the circumstances?

A. A risk and control matrix.
B. A root cause analysis.
C. A spaghetti diagram.
D. A process map.

Answer : B

Question 11

According to IIA guidance, which of the following statements is true regarding risk management in an organization?

A. The risk management function has the sole responsibility for identifying and managing risks in all departments.
B. Risk management is a core responsibility of the internal audit activity.
C. The internal audit activity should consider the organization’s maturity, structure, and the competitive environment to establish the organization’s risk appetite.
D. The internal audit activity may use a risk management or control framework to assist in risk identification.

Answer : D

Question 12

An organization produces 10,000 tennis rackets per month, which is 80 percent of plant capacity. Variable manufacturing costs are $4 per unit, and fixed manufacturing costs are $40,000. The rackets are sold to customers at $12 each. The organization received a request for a special order of 200 rackets for $7 per unit. The special order would not impact daily sales of the product, and the additional units could be produced without increasing factory capacity. Which of the following statements is true regarding this scenario?

A. The relevant cost per unit would be $4, and management should accept the offer.
B. The relevant cost per unit would be $8, and management should decline the offer.
C. The relevant cost per unit would be $7, and management should accept the offer.
D. The relevant cost per unit would be $12, and management should decline the offer.

Answer : A

Question 13

Which of the following best demonstrates conformance with IIA standards related to continuing professional development?

A. Retaining evidence of training in the form of continuing education credits.
B. Seeking guidance regarding internal audit best practices from The IIA.
C. Retaining supervisory reviews conducted on the basis of the development plan.
D. Giving consideration to certain areas of specialization as part of development planning.

Answer : A

Question 14

When issuing his department’s performance report, a sales director in an insurance company knowingly fails to correct the reserves for unearned income that resulted from cancellations of policy subscriptions. This could be considered which of the following types of fraud?

A. Asset misappropriation.
B. Skimming.
C. Disbursement fraud.
D. Information misrepresentation.

Answer : D

Question 15

An organization made a large, one-time purchase of carbon dioxide quotas because management expected the carbon dioxide quota price to rise. However, the price unexpectedly plummeted, and management decided to re-evaluate the quotas and write them down to their market value. Which of the following accounting concepts has the organization applied?

A. Transparency.
B. Consistency.
C. Conservatism.
D. Amortization.

Answer : C

Qualified Info Systems Auditor CIA Challenge v1.0

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