CIA Part 1
Internal Audit Knowledge Quiz
Test your understanding of internal audit principles and practices with this engaging quiz! Covering key concepts from organizational placement to the responsibilities of the chief audit executive, this quiz is designed for professionals looking to enhance their knowledge.
Key Features:
- Multiple-choice questions.
- Covering essential internal audit topics.
- Immediate scoring to track your progress.
To determine the organizational placement of internal audit, the CAE
I. Works with the board
II. Works with senior management
III. Has discretion to independently determine placement
A. II only.
B. I and II only.
C. I only.
D. III only.
The optimal administrative reporting line of the CAE is to
A. The audit committee.
B. Line management.
C. Board of directors.
D. CEO or equivalent.
The IIA has indicated that to achieve necessary independence, the CAE should report functionally to whom?
A. The board.
B. Senior management.
C. Chief executive officer.
D. Shareholders.
Fact Pattern: A service organization is currently experiencing a significant downsizing and process reengineering. Its board of directors has redefined the business goals and established initiatives using inhouse developed technology to meet these goals. As a result, a more decentralized approach has been adopted to run the business functions by empowering the business branch managers to make decisions and perform functions traditionally done at a higher level. The internal auditing staff is made up of the chief audit executive, two managers, and five staff auditors, all with financial background. In the past, the primary focus of successful internal audit activities has been the service branches and the six regional division headquarters that support the branches. These division headquarters are the primary targets for possible elimination. The support functions such as human resources, accounting, and purchasing will be brought into the national headquarters, and technology will be enhanced to enable and augment these
operations.
operations.
Up to this point, the internal audit activity has reported to the chief operating officer. Due to the significant changes, there has been some discussion as to changing this reporting relationship. What would be the best reporting relationship?
A. Administratively and functionally to the chief operating officer.
B. Administratively to the president and functionally to the board.
C. Administratively and functionally to the president.
D. Administratively to the chief financial officer and functionally to the president.
Freedom from conditions that threaten internal auditors’ ability to do unbiased work is
Avoidance of conflicts of interest.
B. Independence.
C. Compliance.
D. Control.
A formal document (charter) approved by the board that defines the internal audit activity’s purpose, authority, and responsibility enhances its
A. Proficiency.
B. Independence.
C. Relationship with management.
D. Exercise of due professional care.
Which of the following is not true with regard to the internal audit charter?
A. It defines the authorities and responsibilities for the internal audit activity.
B. It specifies the minimum resources needed for the internal audit activity.
C. It provides a basis for evaluating the internal audit activity.
D. It should be approved by the board.
The organizational position of the internal audit activity should be free from the effects of irresponsible policy changes by management. The most effective way to ensure that freedom is to
A. Develop written policies and procedures to serve as standards of performance for the internal audit activity.
B. Establish an audit committee within the board.
C. Adopt policies for the functioning of the internal audit activity.
D. Have the internal audit charter approved by the board.
The chief audit executive (CAE) is best defined as the
A. Inspector general.
B. Person responsible for overseeing the contract with the outside provider of internal audit services.
C. Outside provider of internal audit services.
D. Person responsible for the internal audit function.
The internal audit charter includes all of the following except
A. The nature of the chief audit executive’s relationship with the board.
B. The internal auditor’s responsibility to provide assurance and consulting services.
C. The organization’s core values, mission, and vision statements.
D. A formal definition of the purpose, authority, and responsibility of the internal audit
activity.
activity.
Assessing individual objectivity of internal auditors is the responsibility of
A. The board.
B. The chief audit executive.
C. The audit committee.
D. The chief executive officer.
Maintaining individual objectivity is most dependent on
A. Clearly informing auditee departments and functions of The IIA definition of conflict of interest.
B. Internal auditors avoiding conflicts of interest.
C. An annual evaluation by an external assessment team.
D. An annual evaluation by the board.
Internal auditors should be objective. Objectivity
A. Is required only in assurance engagements.
B. Is freedom from threats to the ability to perform audit work without bias.
C. Prohibits internal auditors from providing consulting services relating to operations for which they had previous responsibility.
D. Requires internal auditors not to subordinate their judgment on audit matters to that of others.
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