ACCA CIA Challenge Exam IIA-ACCA Practice Questions

1. What should the internal auditor’s role be in assessing the organization’s ethical climate?

2. According to COSO, which of the following is not considered one of the components of an organization’s internal environment?

3. Which of the following enhances the independence of the internal audit activity?

4. A medical insurance provider uses an electronic claims-submission process and suspects that a number of physicians have submitted claims for treatments that were not performed.

Which of the following control procedures would be most effective to detect this type of fraud?

5. Which of the following activities is most likely to require a fraud specialist to supplement the knowledge and skills of the internal audit activity?

6. Non-statistical sampling does not require which of the following?

7. The internal audit activity is planning a procurement audit and needs to obtain a thorough understanding of the subcontracting process, which can involve multiple individuals in multiple countries.

Which of the following internal audit tools would be most effective to document the process and the key controls?

8. An auditor identifies three errors in the sample of 25 entries selected for review (a 12 percent error rate). Based on this result, the auditor assumes that approximately 59 of the total population of 492 entries are incorrect.

To reach this assumption, the auditor has used a technique known as which of the following?

9. Which of the following is most likely to enhance an internal auditor’s objectivity?

10. According to IIA guidance, which of the following should be formally documented in the internal audit charter?

11. An internal auditor wants to sample data to test an audit theory in a cost-effective way.

Which of the following sampling strategies should she use?

12. The internal audit activity’s responsibilities.

13. Which of the following would not be considered part of preliminary survey of an engagement area?

14. The internal audit charter requires the CAE to report functionally to the audit committee.

15. Management would like to self-assess the overall effectiveness of the controls in place for its 200-person manufacturing department.

Which of the following client-facilitated approaches is likely to be the most efficient way to accomplish this objective?

16. Information regarding assumptions and procedures to be employed.

17. In the area of business acumen, which of the following competencies would be the sole responsibility of an internal audit staff member?

18. When developing the organization’s first risk universe, which of the following would the chief audit executive be least likely to consider?

19. A multinational organization has asked the internal audit activity to assist in setting up the organization’s risk management system. The chief audit executive (CAE) agrees to take on the engagement as a consultant.

Which of the following tasks is appropriate for the CAE to undertake?

20. Which of the following is a common type of payroll fraud?

21. Which of the following types of fraud includes embezzlement?

22. A furniture manufacturer has installed a new fire sprinkler system at its central warehouse and canceled the existing fire insurance policy on that property.

What change of risk response strategy does this course of action most likely reflect?

23. Providing a vehicle driver handbook is an example of a detective control.

24. Which of the following scenarios best illustrates a rationalization as the root cause of potential fraud?

25. Who is responsible for setting the risk appetite?

26. Which of the following offers the best evidence that the internal audit activity has achieved organizational independence?

27. Losing bidders are hired as subcontractors.

28. Which of the following responsibilities would fall under the role of the chief audit executive, rather than internal audit staff or the audit manager?

29. According to The IIA’s Code of Ethics, which of the following statements is true?

30. Which of the following controls could an internal auditor reasonably conclude is effective by observing the physical controls of a large server room?

31. Which of the following are generally recognized as essential elements of a corporate social responsibility program?

32. While preparing for an audit of senior management expenses, the chief audit executive (CAE) learns that management is unable to locate a number of original expense claims to support the related disbursements. She decides to defer the engagement until they can be located.

Which of the following principles likely guided the CAE’s decision?

33. According to IIA guidance, which of the following must the internal auditor consider to meet the requirements for due professional care?

34. Which of the following is not an objective of internal control?

35. A headquarters-based internal auditor has been sent to a major overseas subsidiary to conduct various engagements. Initially, the internal auditor spends time to become familiar with local customs and organization’s practices while embarking on the first engagement.

Which of the following competencies does the internal auditor exercise?

36. According to IIA guidance, which of the following statements describes one of the similarities between assurance and consulting services?

37. An organization is beginning to implement an enterprise risk management program. One of the first steps is to develop a common risk language.

Which of the following statements about a common risk language is true?

38. Which of the following is the primary engagement responsibility of an entry-level internal auditor?

39. Which of the following options is the most cost-effective and efficient way for internal auditors to keep current with the latest developments in the internal audit profession?

40. According to The MA Global Internal Audit Competency Framework, which of the following areas of training would best assist the internal audit activity in improving its use of tools and techniques?

41. Forty-five percent of an organization’s customer payments are submitted online. Eight percent of online payments are rejected. Executive management decides to outsource its online payment services to a contractor that will assume 75 percent of the total value of rejected payments. The organization estimates $1.25 million customer payments due during the contract period.

Which of the following represents the organization’s residual risk for online customer payments due?

42. Which of the following is the most common way that occupational fraud is detected?

43. An internal auditor completed an audit of a bank’s loan department and found all significant risks to be managed adequately through effective internal controls.

Which of the following would be an appropriate conclusion to report to management?

44. An organization is facing a financial downturn and needs to impose major budget reductions to all departments.

According to MA guidance, which of the following actions is most appropriate for the board to take to evaluate the potential impact on the internal audit activity?

45. Which of the following control activities is the most effective to ensure users’ levels of access are appropriate for their current roles?

46. Which of the following items should the chief audit executive disclose to senior management regarding the results of the internal audit activity’s quality assessments?

47. Which of the following is an example of a management control technique?

48. An internal auditor uses a predefined macro provided in a popular spreadsheet application to verify the present value of the organization’s investments.

Which of the following is the most appropriate course of action regarding the auditor’s use of this functionality?

49. CORRECT TEXT

According to IIA guidance, which of the following scenarios demonstrates an internal auditor exercising due professional care?

When auditing investments, the auditor identified instruments with which he was unfamiliar. He decided not to select that type of investment in his sample, as he did not have the knowledge needed to

50. A snow removal company is conducting a scenario planning exercise where participating employees consider the potential impacts of a significant reduction in annua snowfall for the coming winter.

Which of the following best describes this type of risk?

51. An internal auditor needs to recommend a policy element to be included in an organization’s code of ethics.

Which of the following recommendations would be most effective?

52. An internal audit activity is using the auditing-by-element approach to audit the organization’s controls around corporate social responsibility.

Which of the following would be an element for the internal audit activity to consider?

53. According to IIA guidance, which of the following statements about working papers is false?

54. Which of the following factors have the greatest influence on the independence of the internal audit activity?

55. Which of the following is a requirement for an assurance engagement that may not be for a consulting engagement?

56. Which of the following would be the most appropriate first step for the board to take when developing an effective system of governance?

57. Planning safeguards for assets in high-risk areas.

58. If appropriate safeguards exist, which of the following is considered a legitimate internal audit role within risk management at an organization?

59. According to COSO, which of the following describes a principle related to the control environment?

60. The manager for an organization’s accounts payable department resigned her post in that capacity. Three months later, she was recruited to the internal audit activity and has been working with the audit team for the last eight months.

Which of the following assignments would the newly hired internal auditor be able to execute without any impairments to independence or objectivity?

61. A chief audit executive (CAE) is reviewing the internal audit activity’s performance and is concerned that the average number of revisions to findings is steadily rising, making it increasingly difficult to trace the finding to the supporting evidence and workpapers.

According to MA guidance, which of the following elements of the internal audit activity’s quality assurance and improvement program would provide the CAE with the most helpful insight into the cause of this problem?

62. Which of the following is most likely to be considered a control weakness?

63. A new director was hired to lead the internal audit activity at a small start-up company.

Which of the following assignments would impair the director’s independence?

64. A credit card company detects potential errors in credit card numbers by checking whether all entered numbers contain the correct amount of digits.

This is an example of which of the following IT controls?

65. According to IIA guidance, the results of a formal quality assessment should be reported to which of the following groups?

66. Which of the following documents is most appropriate in promoting the objectivity of the internal audit activity?

67. An organization decides to take no action on one of its financial risks because the cost of implementing the control outweighs the value of the asset being protected.

Which of the following best describes this risk strategy?

68. An internal auditor in a small broadcasting organization was assigned to review the revenue collection process. The auditor discovered that some checks from three customers were never recorded in the organization’s financial records.

Which of the following documents would be the least useful for the auditor to verify the finding?

69. Evidence of strong access controls ensuring that authorized individuals have access only to the functions related to their responsibilities.

70. A fraud investigation was completed by management, and a proven fraud was communicated to relevant authorities.

According to MA guidance, which of the following roles would be most appropriate for the internal audit activity to undertake after the investigation?

71. Which of the following statements is true about The IIA Global Internal Audit Competency Framework?

72. Which of the following is an example of a directive control?

73. Identify fraud.

74. According to IIA guidance, which of the following best describes internal auditors’ responsibility regarding fraud?

75. Which of the following types of social responsibilities is voluntary and guided purely by the organization’s desire to make social contributions?

76. Which of the following combinations of conditions is most likely a red flag for fraud?

77. According to IIA guidance, which of the following statements is true when an internal auditor performs consulting services that improve an organization’s operations?

78. The extent of other ongoing services that the engineer may be performing for the organization.

79. According to the COSO enterprise risk management (ERM) framework, which of the following is not part of the new paradigm in ERM?

80. According to IIA guidance, which of the following statements is true regarding periodic internal assessments of the internal audit activity?

81. Given the highly technical and legal nature of privacy issues, which of the following statements best describes the internal audit activity’s responsibility with regard to assessing an organization’s privacy framework?

82. Which of the following best demonstrates the authority of the internal audit activity?

83. Which of the following would be the most important consideration by the internal audit activity when selecting employees to perform an internal quality assessment?

84. Which of the following actions best demonstrates that an internal auditor is exercising due professional care?

85. An internal auditor is reviewing the accounts receivable when she discovers account balances more than three years old. The auditor was previously supervising the area during this time, and she subsequently advises the chief audit executive (CAE) of a potential conflict.

Which of the following is the most appropriate course of action for the CAE to take?

86. The ability to recognize the existence of problems related to tax accounting.

87. According to IIA guidance, which of the following practices by the chief audit executive (CAE) best enhances the organizational independence of the internal audit activity?

88. Evidence discovered during the course of an engagement suggests that multiple incidents

of fraud have occurred. There do not appear to be sufficient controls in place to prevent reoccurrence.

Which of the following is the internal auditor’s most appropriate next step?

89. Ensure that the entire data set is tested.

90. What is the primary benefit to the internal audit activity for undertaking an internal quality assessment?

91. According to IIA guidance, which of the following statements is true regarding the reporting of results from an external quality assessment of the internal audit activity?

92. A large sales organization maintains a system of internal control according to the COSO model and has updated its code of conduct.

This change relates to which component of the COSO framework?

93. Which of the following techniques would provide the most compelling evidence that a safety hazard exists within a manufacturing facility?

94. An IT contractor applied for an internal audit position at a bank. The contractor worked for the bank’s IT security manager two years ago.

If the audit manager interviewed the contractor and wants to extend a job offer, which of the following actions should the chief audit executive pursue?

95. A new internal audit activity is creating its first charter.

According to IIA guidance, which of the following objectives would be appropriate for inclusion in the charter?

96. An internal audit charter, approved by the board, restricts the internal audit activity to providing assurance only on the reliability of financial information and the effectiveness of internal accounting controls.

Which of the following statements is true regarding the extent to which the external auditor may rely on the internal audit activity’s work?

97. An internal auditor is performing analytical reviews as part of an audit of a supermarket’s merchandising department.

Because the economy has declined since midyear, the auditor can expect to encounter which of the following?

98. Which of the following is an example of collusion?

99. In which of the following scenarios would the chief audit executive (CAE) be required to decline the assignment?

100. Which of the following actions should the audit committee take to promote organizational independence for the internal audit activity?