CIA Part 1: Study Unit (1) Questions and
Answers
The purposes of the Standards include all of the following except
A. Establishing the basis for the measurement of internal audit performance.
B. Guiding the ethical conduct of internal auditors.
C. Stating basic principles that represent the practice of internal auditing.
D. Fostering improved organizational processes and operations. - Answer (B) is
correct.
Guiding the ethical conduct of internal auditors is the purpose of the Code of Ethics, not
the Standards.
The proper organizational role of internal auditing is to
A. Assist the external auditor to reduce external audit fees.
B. Perform studies to assist in the attainment of more efficient operations.
C. Serve as the investigative arm of the board.
D. Serve as an independent, objective assurance and consulting activity that adds value
to operations. - Answer (D) is correct.
The Definition of Internal Auditing states, in part, "Internal auditing is an independent,
objective assurance and consulting activity designed to add value and improve an
organization's operations."
One of the purposes of the International Standards for the Professional Practice of
Internal Auditing ("the Standards") is to
A. Encourage the professionalization of internal auditing.
B. Establish the independence of the internal audit activity and emphasize the
objectivity of internal auditing.
C. Encourage external auditors to make more extensive use of the work of internal
auditors.
D. Establish the basis for evaluating internal auditing performance. - Answer (D) is
correct.
The IIA provides the following purposes of the Standards:
Delineate basic principles that represent the practice of internal auditing.
Provide a framework for performing and promoting a broad range of value-added
internal audit activities.
Establish the basis for evaluating internal auditing performance.
Foster improved organizational processes and operations.
Which Standards expand upon the other categories of Standards?
A. Performance Standards.
B. Attribute Standards.
C. Implementation Standards.
D. All of the choices are correct. - Answer (C) is correct.
,Implementation Standards expand upon the Attribute and Performance Standards. They
provide requirements applicable to specific engagements.
A major reason for establishing an internal audit activity is to
A. Relieve overburdened management of the responsibility for establishing effective
controls.
B. Safeguard resources entrusted to the organization.
C. Ensure the reliability and integrity of financial and operational information.
D. Evaluate and improve the effectiveness of control processes. - Answer (D) is
correct.
The internal audit activity helps an organization accomplish its objectives by bringing a
systematic, disciplined approach to evaluate and improve the effectiveness of risk
management, control, and governance processes (Definition of Internal Auditing).
An internal auditor often faces special problems when performing an engagement at a
foreign subsidiary. Which of the following statements is false with respect to the conduct
of international engagements?
A. The IIA Standards do not apply outside of the United States.
B. The internal auditor should determine whether managers are in compliance with local
laws.
C. There may be justification for having different organizational policies in force in
foreign branches.
D. It is preferable to have multilingual internal auditors conduct engagements at
branches in foreign nations. - Answer (A) is correct.
Pronouncements by The IIA have no geographic limits. Compliance with the concepts in
the Standards is essential for the responsibilities of internal auditors to be met,
regardless of the national environment.
The purpose of the internal audit activity can be best described as
A. Adding value to the organization.
B. Providing additional assurance regarding fair presentation of financial statements.
C. Expressing an opinion on the adequate design and functioning of the system of
internal control.
D. Assuring the absence of any fraud that would materially affect the financial
statements. - Answer (A) is correct.
Internal auditing is an independent, objective assurance and consulting activity
designed to add value and improve an organization's operations (Definition of Internal
Auditing).
Which of the following best describes the purpose of the internal audit activity?
A. To add value and improve an organization's operations.
B. To assist management with the design and implementation of risk management and
control systems.
C. To examine and evaluate an organization's accounting system as a service to
management.
,D. To monitor the organization's internal control system for the external auditors. -
Answer (A) is correct.
The Definition of Internal Auditing states, in part, "Internal auditing is an independent,
objective assurance and consulting activity designed to add value and improve an
organization's operations."
The internal audit activity's scope of responsibilities includes
A. Eliminating risk.
B. Managing risk.
C. Evaluating risk.
D. Controlling risk. - Answer (C) is correct.
The internal audit activity helps an organization accomplish its objectives by bringing a
systematic, disciplined approach to evaluate and improve the effectiveness of risk
management, control, and governance processes (Definition of Internal Auditing).
Managing, controlling, and eliminating risk are responsibilities of management.
The Standards consist of three types of Standards. Which Standards apply to the
characteristics of providers of internal auditing services?
A. Implementation Standards.
B. Performance Standards.
C. Attribute Standards.
D. Independence Standards. - Answer (C) is correct.
Attribute Standards concern the characteristics of organizations and parties providing
internal auditing services.
According to The IIA's International Professional Practices Framework, which of the
following constitute mandatory guidance for implementing the Standards?
A. Development Aids.
B. Practice Aids.
C. Performance Standards.
D. Practice Advisories. - Answer (C) is correct.
The mandatory guidance portion of the IPPF consists of the Definition of Internal
Auditing, the Code of Ethics, Attribute Standards, Performance Standards, and
Implementation Standards.
Under the Sarbanes-Oxley Act of 2002 (SOX),
A. An issuer must disclose whether at least one member of the audit committee is a
financial expert.
B. The chairman of the board of directors must be a financial expert.
C. The audit committee must rotate at least one seat on an annual basis.
D. All members of the audit committee must be financial experts. - Answer (A) is
correct.
Under the terms of SOX, an issuer must disclose whether at least one member of the
audit committee is a financial expert. If the audit committee lacks a financial expert, the
issuer must disclose the reason(s).
, The Sarbanes-Oxley Act of 2002 (SOX) imposes which of the following requirements?
A. The board of directors must be composed entirely of independent shareholders.
B. At least one member of the audit committee must be a former partner of the
independent public accounting firm.
C. The audit committee must be composed entirely of independent members of the
board.
D. Once the audit committee has selected the independent public accounting firm, the
committee must not interfere with the firm's conduct of the financial statement audit. -
Answer (C) is correct.
Under the terms of SOX, each member of the issuer's audit committee must be an
independent member of the board of directors. To be independent, a director must not
be affiliated with, or receive any compensation (other than for service on the board)
from, the issuer.
The types of services provided by the internal audit activity can best be described as
A. Auditing and engagement.
B. Auditing and consulting.
C. Assurance and consulting.
D. Auditing and assurance. - Answer (C) is correct.
The internal audit activity provides independent, objective assurance and consulting
services designed to add value and improve an organization's operations (Definition of
Internal Auditing).
Support from which persons or combination of persons listed below is most important to
the success of the internal audit activity?
A. The chief executive officer and chief financial officer.
B. The chief executive officer.
C. Management and the board.
D. The audit committee. - Answer (C) is correct.
The support of management and the board is crucial when inevitable conflicts arise
between the internal audit activity and the department or function under review.
A primary purpose of establishing a code of conduct within a professional organization
is to
A. Reduce the likelihood that members of the profession will be sued for substandard
work.
B. Ensure that all members of the profession perform at approximately the same level of
competence.
C. Promote an ethical culture among professionals who serve others.
D. Require members of the profession to exhibit loyalty in all matters pertaining to the
affairs of their organization. - Answer (C) is correct.
The IIA's Code of Ethics is typical. Its purpose is "to promote an ethical culture in the
profession of internal auditing." The definition of internal auditing states that it is "an
independent, objective assurance and consulting activity." Moreover, internal auditing is
founded on "the trust placed in its objective assurance about governance, risk
Answers
The purposes of the Standards include all of the following except
A. Establishing the basis for the measurement of internal audit performance.
B. Guiding the ethical conduct of internal auditors.
C. Stating basic principles that represent the practice of internal auditing.
D. Fostering improved organizational processes and operations. - Answer (B) is
correct.
Guiding the ethical conduct of internal auditors is the purpose of the Code of Ethics, not
the Standards.
The proper organizational role of internal auditing is to
A. Assist the external auditor to reduce external audit fees.
B. Perform studies to assist in the attainment of more efficient operations.
C. Serve as the investigative arm of the board.
D. Serve as an independent, objective assurance and consulting activity that adds value
to operations. - Answer (D) is correct.
The Definition of Internal Auditing states, in part, "Internal auditing is an independent,
objective assurance and consulting activity designed to add value and improve an
organization's operations."
One of the purposes of the International Standards for the Professional Practice of
Internal Auditing ("the Standards") is to
A. Encourage the professionalization of internal auditing.
B. Establish the independence of the internal audit activity and emphasize the
objectivity of internal auditing.
C. Encourage external auditors to make more extensive use of the work of internal
auditors.
D. Establish the basis for evaluating internal auditing performance. - Answer (D) is
correct.
The IIA provides the following purposes of the Standards:
Delineate basic principles that represent the practice of internal auditing.
Provide a framework for performing and promoting a broad range of value-added
internal audit activities.
Establish the basis for evaluating internal auditing performance.
Foster improved organizational processes and operations.
Which Standards expand upon the other categories of Standards?
A. Performance Standards.
B. Attribute Standards.
C. Implementation Standards.
D. All of the choices are correct. - Answer (C) is correct.
,Implementation Standards expand upon the Attribute and Performance Standards. They
provide requirements applicable to specific engagements.
A major reason for establishing an internal audit activity is to
A. Relieve overburdened management of the responsibility for establishing effective
controls.
B. Safeguard resources entrusted to the organization.
C. Ensure the reliability and integrity of financial and operational information.
D. Evaluate and improve the effectiveness of control processes. - Answer (D) is
correct.
The internal audit activity helps an organization accomplish its objectives by bringing a
systematic, disciplined approach to evaluate and improve the effectiveness of risk
management, control, and governance processes (Definition of Internal Auditing).
An internal auditor often faces special problems when performing an engagement at a
foreign subsidiary. Which of the following statements is false with respect to the conduct
of international engagements?
A. The IIA Standards do not apply outside of the United States.
B. The internal auditor should determine whether managers are in compliance with local
laws.
C. There may be justification for having different organizational policies in force in
foreign branches.
D. It is preferable to have multilingual internal auditors conduct engagements at
branches in foreign nations. - Answer (A) is correct.
Pronouncements by The IIA have no geographic limits. Compliance with the concepts in
the Standards is essential for the responsibilities of internal auditors to be met,
regardless of the national environment.
The purpose of the internal audit activity can be best described as
A. Adding value to the organization.
B. Providing additional assurance regarding fair presentation of financial statements.
C. Expressing an opinion on the adequate design and functioning of the system of
internal control.
D. Assuring the absence of any fraud that would materially affect the financial
statements. - Answer (A) is correct.
Internal auditing is an independent, objective assurance and consulting activity
designed to add value and improve an organization's operations (Definition of Internal
Auditing).
Which of the following best describes the purpose of the internal audit activity?
A. To add value and improve an organization's operations.
B. To assist management with the design and implementation of risk management and
control systems.
C. To examine and evaluate an organization's accounting system as a service to
management.
,D. To monitor the organization's internal control system for the external auditors. -
Answer (A) is correct.
The Definition of Internal Auditing states, in part, "Internal auditing is an independent,
objective assurance and consulting activity designed to add value and improve an
organization's operations."
The internal audit activity's scope of responsibilities includes
A. Eliminating risk.
B. Managing risk.
C. Evaluating risk.
D. Controlling risk. - Answer (C) is correct.
The internal audit activity helps an organization accomplish its objectives by bringing a
systematic, disciplined approach to evaluate and improve the effectiveness of risk
management, control, and governance processes (Definition of Internal Auditing).
Managing, controlling, and eliminating risk are responsibilities of management.
The Standards consist of three types of Standards. Which Standards apply to the
characteristics of providers of internal auditing services?
A. Implementation Standards.
B. Performance Standards.
C. Attribute Standards.
D. Independence Standards. - Answer (C) is correct.
Attribute Standards concern the characteristics of organizations and parties providing
internal auditing services.
According to The IIA's International Professional Practices Framework, which of the
following constitute mandatory guidance for implementing the Standards?
A. Development Aids.
B. Practice Aids.
C. Performance Standards.
D. Practice Advisories. - Answer (C) is correct.
The mandatory guidance portion of the IPPF consists of the Definition of Internal
Auditing, the Code of Ethics, Attribute Standards, Performance Standards, and
Implementation Standards.
Under the Sarbanes-Oxley Act of 2002 (SOX),
A. An issuer must disclose whether at least one member of the audit committee is a
financial expert.
B. The chairman of the board of directors must be a financial expert.
C. The audit committee must rotate at least one seat on an annual basis.
D. All members of the audit committee must be financial experts. - Answer (A) is
correct.
Under the terms of SOX, an issuer must disclose whether at least one member of the
audit committee is a financial expert. If the audit committee lacks a financial expert, the
issuer must disclose the reason(s).
, The Sarbanes-Oxley Act of 2002 (SOX) imposes which of the following requirements?
A. The board of directors must be composed entirely of independent shareholders.
B. At least one member of the audit committee must be a former partner of the
independent public accounting firm.
C. The audit committee must be composed entirely of independent members of the
board.
D. Once the audit committee has selected the independent public accounting firm, the
committee must not interfere with the firm's conduct of the financial statement audit. -
Answer (C) is correct.
Under the terms of SOX, each member of the issuer's audit committee must be an
independent member of the board of directors. To be independent, a director must not
be affiliated with, or receive any compensation (other than for service on the board)
from, the issuer.
The types of services provided by the internal audit activity can best be described as
A. Auditing and engagement.
B. Auditing and consulting.
C. Assurance and consulting.
D. Auditing and assurance. - Answer (C) is correct.
The internal audit activity provides independent, objective assurance and consulting
services designed to add value and improve an organization's operations (Definition of
Internal Auditing).
Support from which persons or combination of persons listed below is most important to
the success of the internal audit activity?
A. The chief executive officer and chief financial officer.
B. The chief executive officer.
C. Management and the board.
D. The audit committee. - Answer (C) is correct.
The support of management and the board is crucial when inevitable conflicts arise
between the internal audit activity and the department or function under review.
A primary purpose of establishing a code of conduct within a professional organization
is to
A. Reduce the likelihood that members of the profession will be sued for substandard
work.
B. Ensure that all members of the profession perform at approximately the same level of
competence.
C. Promote an ethical culture among professionals who serve others.
D. Require members of the profession to exhibit loyalty in all matters pertaining to the
affairs of their organization. - Answer (C) is correct.
The IIA's Code of Ethics is typical. Its purpose is "to promote an ethical culture in the
profession of internal auditing." The definition of internal auditing states that it is "an
independent, objective assurance and consulting activity." Moreover, internal auditing is
founded on "the trust placed in its objective assurance about governance, risk
