IIA-CIA-Part1 Practice Test

A chief audit executive (CAE) for a specialty retailer is asked by management to review the
controls in place to manage their electronic funds transfer process. The internal audit
activity has no experience with similar engagements. What is the most appropriate course
of action for the CAE to take?

A.

Plan the engagement and begin fieldwork using existing staff.

B.

Attempt to discourage management from the request.

C.

Hire an outside consulting firm to assist with the engagement.

D.

Defer the audit until current staff can be appropriately trained.

A company has established its environmental audit activity as part of its legal department
rather than part of its internal audit activity,which reports to the audit committee. The board
has requested that the chief audit executive (CAE) provide an annual opinion on whether
environmental risks are being properly addressed. In these circumstances,the CAE should
recommend to the audit committee that the internal audit activity:

A.

Review the recommendations in all environmental audit reports.

B.

Discuss with the environmental auditors the results of their reviews.

C.

Periodically carry out a quality assessment of the environmental audit activity.

D.

Include a review of environmental issues in some internal audit engagements.

In order to effectively handle conflict between audit team members,an audit team leadershould:

A.

Avoid addressing the conflict until the leader is sure that there is a problem.

B.

Be assertive and keep the team members focused on a resolution.

C.

Ask one of the team members to resolve the issue by being more conciliatory.

D.

Transfer one of the team members to another assignment.

It is important for a chief audit executive to seek formal approval from the board regarding
an internal audit charter so that:

A.

The effectiveness of the internal audit activity can be measured.

B.

The status of the internal audit activity can be more clearly established.

C.

There is assurance that all internal audit activities will be completed.

D.

Improvements can be implemented in internal audit processes.

The chief audit executive (CAE) routinely provides activity reports to the board during
quarterly board meetings. Senior management has asked to review the CAE's board
presentation before each board meeting so that any issues or questions can be discussed
beforehand. The CAEshould:

A.

Provide the activity reports to senior management as requested and discuss any issues
that may require action to be taken.

B.

Not provide activity reports to senior management because such matters are the sole
province of the board.

C.

Disclose only those matters in the activity reports that pertain to expenditures and
financial budgets of the internal audit activity.

D.

Provide information to senior management that pertains only to completed audit
engagements and observations available in published engagement final communications.