IIA IIA-CIA-Part1 Exam Dumps

Internal Audit Fundamentals

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Exam Code	IIA-CIA-Part1
Exam Name	Internal Audit Fundamentals
Questions	735 Questions Answers With Explanation
Update Date	04, 30, 2026
Price	Was : $81 Today : $45 Was : $99 Today : $55 Was : $117 Today : $65

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Demo Questions

Question # 1

While conducting an audit, an internal auditor notices an unusual increase in sales among a small number of units within the organization. The units also experienced persistent negative cash flows despite reported earnings and earnings growth. Which type of fraud do the auditor's findings most likely indicate? 

A. Employee collusion with customer organizations.  
B. Improper asset valuation.  
C. Inventory theft.  
D. Fictitious revenues.  

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Question # 2

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 CAE should: 

A. Provide the activity reports to senior management as requested and discuss any issues thatmay require action to be taken.
B. Not provide activity reports to senior management because such matters are the sole provinceof the board.
C. Disclose only those matters in the activity reports that pertain to expenditures and financialbudgets of the internal audit activity.
D. Provide information to senior management that pertains only to completed audit engagementsand observations available in published engagement final communications. 

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Question # 3

An internal auditor for a large computer company suspects that returned computer systems are being repackaged as new products and shipped to other customers before the defects have been 138 repaired. Which of the following would be the most persuasive piece of evidence in support of the auditor's suspicions?

A. Credit memos issued after year end for goods shipped before year end.  
B. Evidence of returned goods in the shipping and receiving area.  
C. An unusual number of customer complaints.  
D. The results of a complete physical inventory taken at year end.  

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Question # 4

A product manager occasionally overrides established purchasing policies in order to expedite the introduction of new products in a competitive industry. The manager's overrides are:

A. Unacceptable as they are not consistent with the purchasing policy.  
B. Only acceptable if the override is within the manager's spending limit.  
C. Only acceptable if a policy governing such overrides is in place and they are reported.  
D. Acceptable due to the highly competitive nature of the industry.  

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Question # 5

Which of the following is accomplished by the internal audit charter? 

A. It establishes the audit committee’s position within the organization.  
B. It authorizes access to records,personnel and physical properties relevant to the performance of engagements. 
C. It defines the scope of internal and external audit activities.  
D. It states the nature of the chief audit executive’s administrative reporting relationship with the board.

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Question # 6

Which of the following is the responsibility of an internal auditor? 1. Assist operating management in implementing audit recommendations.2. Provide management with value-added analysis to improve operations. 3. Become an advocate for changes to the internal audit activity charter. 4. Disclose non-financial risks that may be identified during the course of an engagement.  

A. 1 and 3 only  
B. 2 and 4 only  
C. 1,2,and 4 only  
D. 1,2,3,and 4  

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Question # 7

COBIT is primarily designed to: 

A. Define auditing standards for information technology auditors.`  
B. Satisfy information technology regulatory requirements.  
C. Provide guidance to govern information technology activities.  
D. Assist technology professionals in interpreting technological specifications.  

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Question # 8

An internal auditor is testing the controls of a large and complex food production process where quality assurance is critical. Management provides process charts and documentation, but the auditor quickly determines that this information is incomplete and out of date. Which of the following would be the most appropriate course of action for the auditor to follow?

A. Use the documentation but meet with the production supervisor to obtain updated information before proceeding. 
C. Defer the audit until management can provide updated charts and documentation as this is their responsibility.
D. Use the documentation but use observation during the engagement to provide missing information. 

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Question # 9

Management has decided to invest significant capital in a new and innovative large computer system. They understand that they are one of the first organizations to implement this system, but they believe the benefits outweigh the uncertainty over the performance and reliability of the software. This decision best describes which aspect of risk management? 

A. Risk appetite.  
B. Risk tolerance.  
C. Residual risk.  
D. Inherent risk.  

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Question # 10

An internal auditor is gathering evidence for an organization's internal audit engagement and requests a sample of vendor invoices from the organization. Which of the following is true regarding the reliability of this evidence? 

A. The invoices have zero reliability.  
B. The invoices have low reliability.  
C. The invoices have medium reliability.  
D. The invoices have high reliability.  

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Question # 11

Which of the following processes should be included in a benchmarking activity?I. Identify key measures.II. Collect data on performances and practices.III. Identify opportunities for improvement.

A. IIonly
B. I and IIIonly
C. II and IIIonly
D. I,II,and III.

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Question # 12

In a well-developed management environment, the internal audit activity would.  

A. Report the results of audit engagements to line management as well as to senior management.
B. Conduct regularly scheduled audits of existing systems and initial audits of new computersystems after they have begun operating.
C. Interface primarily with senior management,minimizing interactions with line managers who arethe subjects of internal audit work.
D. Focus on the maintenance of accounting controls (such as segregation of the duties ofauthorization,recording,and custody) and report results to the audit committee. 

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Question # 13

An internal auditor is assessing the risk of employees falsifying reimbursement requests for business-related meals or travel. Which of the following procedures would the internal auditor most likely perform first?

A. Review the supplemental documentation provided for a sample of reimbursement requests.  
B. Interview the payroll/accounting supervisor to determine what controls exist to prevent fraud.  
C. Determine whether or not the payroll/accounting department has been subject to regular review
D. Establish a flowchart of the payroll/accounting functions that include any controls currently in place.

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Question # 14

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

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.

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Question # 15

Which of the following is a key performance indicator for an internal audit function? 

A. Audit expenditures compared to financial budgets.
B. Percent of required continuing education hours completed.
C. Implementation of new audit computer software.
D. Frequency of meetings with the board members.

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Question # 16

Which of the following is the most important limitation on the effectiveness of audit committees?

A. Audit committees may be composed of independent directors; however,those directors mayhave close personal and professional friendships with management.
B. Audit committee members are compensated by the organization and thus favor a stockholderview.
C. Audit committees devote most of their efforts to external audit concerns and do not pay muchattention to internal auditing and the overall control environment.
D. Audit committee members do not normally have degrees in the accounting or auditing fields.

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Question # 17

A chief audit executive (CAE) is obtaining information required by a regulatory oversight body and discovers a situation that requires management to take immediate corrective action. What is the best course of action for the CAE to take?

A. Wait until all of the information has been gathered and reported to the oversight body beforereporting the situation to management.
B. Check with legal counsel to determine whether the situation can be reported to managementbefore all information has been submitted to the oversight body.
C. Report the situation to management immediately. 
D. Schedule an engagement to explore the situation in depth,before reporting to eithermanagement or the oversight body.

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Question # 18

The primary role of the internal audit activity in regard to an organization's ethical climate is to:  

A. Participate as chief ethics officer.
B. Periodically assess the ethical climate.
C. Utilize surveys to evaluate employee ethics.
D. Demonstrate ethical behavior.

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Question # 19

Which of the following statements, if true, could justify an auditor's decision not to report governance-related control deficiencies to the audit committee? 

A. Management plans to initiate corrective action.
B. The board of directors has a separate corporate governance committee.
C. The amounts and the potential risks associated with the deficiencies are not material to theoverall organization.
D. Governance issues are complex and the auditor should rely on management's analysis of theextent of the problem.

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Question # 20

According to the International Professional Practices Framework, a primary purpose of evaluating the adequacy of an organization's risk management, control, and governance processes is to determine if it: 

A. Was designed to ensure compliance with policies,plans,procedures,laws,and regulations.
B. Provides reasonable assurance that the organization's objectives will be met.
C. Mitigates inherent risk.
D. Assures the reliability and integrity of information used by management.

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Question # 21

In addition to data protection, which of the following is a control that is typically used by companiesto safeguard the privacy rights of their customers?I. End-user computing.II. Encryption of data.III. Spyware.IV. Intrusion detection.

A. IIonly
B. I and IIIonly
C. II and IVonly
D. I,II,and IVonly

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Question # 22

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.

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Question # 23

Which statement most accurately describes how criteria are established for use by internal auditors in determining whether goals and objectives have been accomplished? 

A. Management is responsible for establishing the criteria.
B. Internal auditors should use professional standards or government regulations to establish thecriteria.
C. The industry in which a company operates establishes criteria for each member company through benchmarks and best practices for that industry. 
D. Appropriate accounting or auditing standards,including international standards,should be used as the criteria.

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Question # 24

An internal audit activity encounters a scope limitation from senior management that will affect its ability to meet its goals and objectives for a potential engagement client. The nature of the scope limitation should be. 

A. Noted in the audit workpapers,but the engagement should be carried out as scheduled,with anynecessary adjustments made based on the scope limitation.
B. Communicated to the external auditors so that they can investigate the area in more detail.
C. Communicated,preferably in writing,to the board.
D. Communicated to management,stating that the limitation will not be accepted because it wouldimpair the audit activity's independence.

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Question # 25

A major difference between enterprise risk management and traditional risk management lies inthe narrow focus of traditional risk management on:I. Property and liability risks.II. Risks with insurance solutions.III. Risks impacting organizational objectives.

A. I and IIonly
B. I and IIIonly
C. II and IIIonly
D. I,II,and III.

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