CIA CIA Internal Controls & Audit 2

Question 1

The Institute of Internal Auditors (IIA) Standards require internal auditors to maintain which quality characteristic above all others?

Accepted Answer

Independence and objectivity

Answer

IIA Standards mandate that internal auditors must be free from conditions that threaten their ability to perform their duties impartially.

Question 2

What is the purpose of an internal audit's 'risk-based audit plan'?

Accepted Answer

To prioritize audit resources on the highest-risk areas of the organization

Answer

A risk-based audit plan focuses limited internal audit resources where the potential for significant loss or non-compliance is greatest.

Question 3

When assessing internal controls over financial reporting (ICFR) under SOX Section 404, management must:

Accepted Answer

Document and test the effectiveness of key controls and disclose any material weaknesses

Answer

SOX Section 404 requires management to assess and report on the effectiveness of ICFR, and external auditors must attest to that assessment.

Question 4

An 'audit finding' in internal audit reports typically contains which four elements?

Accepted Answer

Criteria, condition, cause, and effect

Answer

A well-structured audit finding states what should be (criteria), what is (condition), why it occurred (cause), and the impact (effect).

Question 5

Which internal control is most effective at preventing duplicate vendor payments?

Accepted Answer

Three-way matching of purchase order, receiving report, and invoice

Answer

Three-way matching verifies that the PO, receiving report, and invoice all agree before payment is authorized, preventing unauthorized or duplicate payments.

(CIA) Certified Industrial Accountant Practice Test

(CIA) Certified Industrial Accountant Practice Test

CIA CIA Internal Controls & Audit 2