[Free] Download New Updated (October 2016) IIA IIA-CIA-Part1 Real Exam 171-180

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QUESTION 171

A company has entered into a $20,000,000 fixed-price contract with a general contractor for the construction of a new retail outlet. For this contract,which of the following would represent the greatest risk?

 

A.

Excessive labor charged to the project.

B.

Poor physical protection of materials and equipment.

C.

Failure to complete the project within budget.

D.

Substitution of inferior materials.

 

Correct Answer: D

 

 

QUESTION 172

The chief commodity trader for a large energy company learns from a friend that a competitor will likely fail its upcoming regulatory audit and will be forced to temporarily decrease production. If the information is true,the trader has short-term opportunities to make trades that will financially benefit the trader’s company and will lead to a substantial increase in the trader’s performance bonus. However, if the information is not true, making the trades will significantly increase the company’s risk of being caught in a long position. From an ethical perspective, which of the following would be the most appropriate course of action for the trader to take?

 

A.

Make the trade because the company and the trader will both benefit.

B.

Have another trader on staff make the trade in order to avoid a conflict of interest.

C.

Disclose the information to the risk oversight committee but proceed with the trade to capitalize on the opportunity.

D.

Defer the decision to management and risk the loss of the trading opportunity.

 

Correct Answer: D

 

 

QUESTION 173

A daily report which lists unsuccessful attempts to log on to a computer system is A.

 

A.

Corrective control.

B.

Preventive control.

C.

Detective control.

D.

Compensating control.

 

Correct Answer: C

 

 

QUESTION 174

If management has not established a risk management process, the internal audit activity could.

 

A.

Take a proactive role that supplements traditional assurance activities.

B.

Identify and mitigate risks to the organization.

C.

Assume responsibility for the management of identified risks.

D.

Assume primary responsibility for determining if adequate and effective processes are in place.

 

Correct Answer: A

 

 

QUESTION 175

The best reason for separating the cash-receiving function from the related record-keeping function is to:

 

A.

Segregate cash payments from cash receipts.

B.

Provide accountability for cash received.

C.

Minimize misappropriations in cash receipts.

D.

Improve physical security over the cash-receiving function.

 

Correct Answer: C

 

 

QUESTION 176

A chief audit executive (CAE) is obtaining information required by a regulatory oversight body and discovers a situation that requires management to take immediate corrective action. What is the best course of action for the CAE to take?

 

A.

Wait until all of the information has been gathered and reported to the oversight body before reporting the situation to management.

B.

Check with legal counsel to determine whether the situation can be reported to management before all information has been submitted to the oversight body.

C.

Report the situation to management immediately.

D.

Schedule an engagement to explore the situation in depth, before reporting to either management or the oversight body.

 

Correct Answer: C

 

 

QUESTION 177

A chief audit executive (CAE) for a specialty retailer is asked by management to review the controls in place to manage their electronic funds transfer process. The internal audit activity has no experience with similar engagements. What is the most appropriate course of action for the CAE to take?

 

A.

Plan the engagement and begin fieldwork using existing staff.

B.

Attempt to discourage management from the request.

C.

Hire an outside consulting firm to assist with the engagement.

D.

Defer the audit until current staff can be appropriately trained.

 

Correct Answer: C

 

 

QUESTION 178

When a risk assessment process has been used to construct an audit engagement schedule, which of the following should receive attention first?

 

A.

The external auditors have requested assistance for their upcoming annual audit.

B.

A new accounts payable system is currently undergoing testing by the information technology department.

C.

Management has requested an investigation of possible lapping in receivables.

D.

The existing accounts payable system has not been audited over the past year.

 

Correct Answer: C

QUESTION 179

Noncompliance with which of the following would cause a control deficiency related to privacy protection practices?

 

I. An organization’s internal privacy policies.

 

II. Financial accounting standards.

 

III. Privacy laws and regulations.

 

IV. The Standards.

 

A.

I and III only

B.

II and IV only

C.

II, III, and IV only

D.

I, II, III, and IV.

 

Correct Answer: A

 

 

QUESTION 180

When performing benchmarking during the planning phase of a performance audit,an internal auditorshould:

 

A.

Determine the current performance gap.

B.

Project future performance levels.

C.

Develop functional action plans.

D.

Identify comparative organizations.

 

Correct Answer: D

 

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