[Free] Download New Updated (October 2016) IIA IIA-CIA-Part1 Real Exam 131-140

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QUESTION 131

Which statement most accurately describes how criteria are established for use by internal auditors in determining whether goals and objectives have been accomplished?

 

A.

Management is responsible for establishing the criteria.

B.

Internal auditors should use professional standards or government regulations to establish the criteria.

C.

The industry in which a company operates establishes criteria for each member company through benchmarks and best practices for that industry.

D.

Appropriate accounting or auditing standards, including international standards, should be used as the criteria.

 

Correct Answer: A

 

 

 

QUESTION 132

When developing an effective risk-based plan to determine audit priorities, an internal audit activity should start by:

 

A.

Identifying risks to the organization’s operations.

B.

Observing and analyzing controls.

C.

Prioritizing known risks.

D.

Reviewing organizational objectives.

 

Correct Answer: D

 

 

QUESTION 133

What role, if any
, should the internal audit activity have in the process of following up on observations and recommendations made by the external auditors?

 

A.

The internal audit activity should have no role in this process in order to ensure independence.

B.

The internal audit activity should become involved only if the chief audit executive has sufficient evidence that the follow-up is not occurring.

C.

The internal audit activity should review the adequacy and effectiveness of management’s follow-up actions.

D.

The internal audit activity should become involved only if specifically requested by management or the board of directors.

 

Correct Answer: C

 

 

QUESTION 134

Which of the following actions by a chief audit executive is most likely to prevent exaggerated sales reports by division management?

 

I. Hire a new internal auditor who has fraud investigation credentials.

 

II. Assist the controller in developing and monitoring a series of business process indicators which are historically correlated with,but independent of,sales.

 

III. Announce a series of internal audit engagements focusing on compliance with corporate sales-reporting policies.

 

IV. Ask the president and the board to issue a statement of corporate policy stressing the importance of accurate management reporting and the negative consequences of intentional misreporting.

 

A.

I and II only

B.

II and III only

C.

III and IV only

D.

I, II, III, and IV.

 

Correct Answer: C

 

 

 

 

 

QUESTION 135

The primary reason that a chief audit executive (CAE) reviews external audit management letters and management response is to:

 

A.

Select areas to emphasize in future internal audit engagements.

B.

Check the effectiveness of external audit resources used.

C.

Ensure that comments in the letter are supported by evidence.

D.

Verify that there has been no duplication of internal audit work.

 

Correct Answer: A

 

 

QUESTION 136

An organization’s external auditor has prepared a list of risks and issues and has recommended to senior management that the internal audit activity focus on these items. Senior management has forwarded the list to the chief audit executive (CAE). The CAE should:

 

A.

Incorporate the external auditor’s requirements into the internal audit plan.

B.

Ignore the external auditor’s requirements because they are outside of the internal audit activity’s planned scope of work.

C.

Consider the issues raised by the external auditor for possible inclusion in the planned scope of work.

D.

Report the risks and issues to the
audit committee for possible future attention.

 

Correct Answer: C

 

 

QUESTION 137

A company has established its environmental audit activity as part of its legal department rather than part of its internal audit activity, which reports to the audit committee. The board has requested that the chief audit executive (CAE) provide an annual opinion on whether environmental risks are being properly addressed. In these circumstances, the CAE should recommend to the audit committee that the internal audit activity:

 

A.

Review the recommendations in all environmental audit reports.

B.

Discuss with the environmental auditors the results of their reviews.

C.

Periodically carry out a quality assessment of the environmental audit activity.

D.

Include a review of environmental issues in some internal audit engagements.

 

Correct Answer: C

 

 

QUESTION 138

Which of the following statements regarding organizational governance is not correct?

 

A.

An effective internal audit function is one of the four cornerstones of good governance.

B.

Those performing governance activities are accountable to the customer.

C.

Accountability is one of the key elements of organizational governance.

D.

Governance principles and the need for an internal audit function are applicable to governmental and not-for-profit activities.

 

Correct Answer: B

 

QUESTION 139

To enhance the independence of both the internal and external audit functions, audit committees should be composed of:

 

A.

A rotating subcommittee of the board of directors or its equivalent.

B.

A combination of external members of the board of directors and company officers.

C.

Members from all important constituencies, specifically including representatives from banking, labor, regulatory agencies, shareholders, and officers.

D.

Only external members of the board of directors or other similar oversight committees.

 

Correct Answer: D

 

 

QUESTION 140

Management should be included in the development of the audit plan in order to:

 

A.

Provide assurance that past audit recommendations have been properly implemented.

B.

Select the audit tests that will be used for each engagement.

C.

Verify that the highest risks are included in the risk-based audit plan.

D.

Guarantee access to the organization’s sites and records for audit work.

 

Correct Answer: C

 

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