Free IIA IIA-CIA-Part1 Practice Questions 2026 - Page 13

While preparing the audit plan for an automobile manufacturing company, the chief audit executive (CAE) noted that the company's engineering department received a high risk ranking. However, the internal audit activity is understaffed, and current staff do not possess the necessary skills to adequately assess the effectiveness of the engineering department. What is the most appropriate course of action for the CAE to take?

A. Include the engineering department on the audit plan, use the available internal audit resources to conduct the review, and exclude procedures that cannot be adequately assessed.

B. Advise management to accept the assessed risk until the internal auditors are able to review the area adequately.

C. Recruit internal auditors with the required competencies and wait until they are employed before including this audit on the internal audit plan.

D. Proceed with a review of the engineering department but supplement the internal audit team with nonauditors from an external engineering company who have the required skills to assist

In a retail organization, sales teams compete with each other to achieve and exceed sales targets. Each quarter, the members of the top sales team receive a bonus. In this environment, management should closely monitor for the emergence of which of the following potential risks?

A. Risks related to employee turnover.

B. Risks related to data manipulation.

C. Risks related to employee competency.

D. Risks related to not achieving sales targets.

Which of the following concepts is emphasized in the Mission of Internal Audit?

A. Support of good governance and controls.

B. Enhancement of organizational value.

C. Protection of tangible and intangible assets.

D. Provision of professional advisory and assurance services.

Which of the following factors are commonly assessed to determine the magnitude of risk events?

A. Tolerance and appetite

B. Inherent and residual risk

C. Cost and benefit

D. Impact and likelihood

According to IIA guidance, which of the following statements regarding the internal audit charter is true?

A. The nature of consulting services typically is not included in the charter.

B. The chief audit executive must formally review the charter at least once a year

C. The nature of assurances provided to parties outside of the organization typically is not included in the charter.

D. The charter typically defines the internal audit activity's position within the organization.

A chief audit executive (CAE) is considering hiring a candidate who most recently worked for a large public accounting firm What would be the CAE’s most likely concern regarding this candidate*?

A. Low-level audit expertise

B. Narrow industry experience

C. MPotential conflict of interest

D. Weak interpersonal skills

Which of the following requests, if accepted by the internal audit activity, would impair its independence?

A. A request to develop workshops on corporate governance for management.

B. A request to act as liaison with external auditors.

C. A request to determine appropriate risk management responses for management.

D. request to provide counseling services on ethical matters.

Which of the following should play a leading role in overseeing the ethical atmosphere of an organization?

A. Internal audit activity

B. Operating management

C. Senior management

D. Board of directors

Which of the following is an indicator of ineffective third-party risk management?

A. Sourcing of third parties does not follow public procurement law.

B. Violations of service conditions trigger either fines or termination.

C. Due diligence of third parties is conducted only after contract signing.

D. The right-to-audit clause is limited by personal data protection regulations.

Which of the following statements best describes a functional difference between external auditors and internal auditors?

A. Internal auditors evaluate past achievements to understand whether controls are operating effectively, and external auditors focus on the accuracy of financial reporting.

B. Internal auditors provide assurance about the sufficiency of controls to manage risks. Including risks of failure to achieve future goals, and external auditors evaluate the accuracy and understandability of financial reporting.

C. internal auditors are always employed by the organization, rather than outsourced, and external auditors are never employed by the organization but contracted independently.

D. Internal auditors are most directly concerned with the detection of fraud, while external auditors are most directly concerned with the prevention of fraud.