Certified Internal Auditor (IIA) 5 — Questions and Answers
Question 1: Computer-assisted audit techniques (CAATs) are PRIMARILY used to:
- Replace the need for professional judgment
- Test large volumes of data efficiently and identify anomalies (Correct answer)
- Prepare the auditor's working papers automatically
- Communicate findings to the audit committee
Correct answer: Test large volumes of data efficiently and identify anomalies
CAATs allow auditors to analyze entire populations of data, perform calculations, and detect exceptions that would be impractical to identify manually.
Question 2: Which of the following BEST characterizes the concept of 'organizational independence' for internal audit?
- The CAE reports to the external auditors
- The internal audit activity is free from interference in determining its scope and reporting results (Correct answer)
- Internal auditors are outsourced to a third-party firm
- The audit department is housed in a separate building
Correct answer: The internal audit activity is free from interference in determining its scope and reporting results
Organizational independence means internal audit can determine its own scope, perform work without interference, and communicate results without restriction.
Question 3: During a fraud investigation, the internal auditor's role is BEST described as:
- Prosecuting the suspected fraudster
- Gathering and evaluating evidence to determine whether fraud occurred (Correct answer)
- Imposing disciplinary sanctions on employees
- Notifying law enforcement without informing management
Correct answer: Gathering and evaluating evidence to determine whether fraud occurred
Internal auditors gather and objectively evaluate evidence to determine whether fraud has occurred, then report findings to appropriate parties.
Question 4: An engagement work program should be prepared:
- After all fieldwork is completed
- Before conducting fieldwork, based on preliminary survey results (Correct answer)
- By auditee management to guide the audit team
- Only for complex audits lasting more than 90 days
Correct answer: Before conducting fieldwork, based on preliminary survey results
The work program is developed prior to fieldwork to define the procedures, timing, and responsibilities needed to achieve engagement objectives.
Question 5: Which of the following is a characteristic of a well-written audit observation (finding)?
- It includes the auditor's personal opinion of management's competence
- It contains criteria, condition, cause, and effect (Correct answer)
- It focuses only on what went wrong without discussing causes
- It avoids recommending corrective actions to remain objective
Correct answer: It contains criteria, condition, cause, and effect
A complete audit finding includes the criteria (what should be), condition (what is), cause (why it happened), and effect (the risk/impact).
Question 6: The IIA's attribute standard on 'proficiency' requires that internal auditors:
- Hold a CIA certification before performing any audit work
- Possess the knowledge, skills, and competencies needed to perform their responsibilities (Correct answer)
- Complete at least 80 hours of training per year
- Specialize in financial auditing exclusively
Correct answer: Possess the knowledge, skills, and competencies needed to perform their responsibilities
Proficiency requires that internal auditors possess or obtain the knowledge, skills, and other competencies necessary to fulfill their individual responsibilities.
Question 7: When internal audit outsources a portion of work to an external service provider, the CAE is responsible for:
- Transferring all accountability to the service provider
- Ensuring the service provider accepts liability for audit opinions
- Maintaining overall accountability for the quality and accuracy of the outsourced work (Correct answer)
- Requiring the provider to sign the final audit report
Correct answer: Maintaining overall accountability for the quality and accuracy of the outsourced work
The CAE retains full responsibility for the quality and integrity of all internal audit work, including work performed by external service providers.
Certified Internal Auditor (IIA) 5
Computer-assisted audit techniques (CAATs) are PRIMARILY used to: