CIA P1_W1 Review Quiz

Which of the following situations is a violation of The IIA Code of Ethics?

• Knowing that management was aware of the situation, an internal auditor purposely left a description of an unlawful practice out of the report.

• Based upon knowledge of the probable success of the employer's business, an internal auditor invested in a mutual fund that specialized in the same industry

• An internal auditor shared audit techniques with auditors from another company

• An internal auditor, with the knowledge and consent of management, accepted a token gift from a customer of the organization that was not presumed to impair and did not impair judgment

In complying with The IIA Code of Ethics, an internal auditor should

• Go beyond the limitation of personal technical skills to advance the interest of the organization.

• Respect and contribute to the objectives of the organization even if it is engaged in illegal activities

• Use individual judgment in the application of the principles set forth in the Code

• Primarily applies the competency principle in establishing trust

Which of the following concurrent occupations could appear to subvert the ethical behavior of an internal auditor?

• Internal auditor and part-time business insurance broker

• Internal auditor and adjunct faculty member of a local business college that educates potential employees

• Internal auditor and a well-known charitable organization's local in-house chairperson

• Internal auditor and landlord of multiple housing that publicly advertises for tenants in a local community newspaper listing monthly rental fees

Which of the following actions taken by a chief audit executive (CAE) could be considered professionally ethical under The IIA Code of Ethics?

• To save company resources, the CAE cancels all staff training for the next 2 years on the basis that all staff are too new to benefit from training

• To save company resources, the CAE limits the audit of foreign branches to confirmations from branch managers that no major personnel changes have occurred.

• The CAE decides to delay the audit of a branch so that his nephew, the branch manager, will have time to 'clean things up'.

• The CAE refuses to provide information about company operations to his father, who is a shareholder.

Which of the following actions by an internal auditor is most likely a violation of The IIA Code of Ethics?

• Allowing use of the Certified Internal Auditor designation in a context not involving his/her employment

• Accepting payment for teaching auditing at a local university

• Owning a significant amount of stock in a public company that is a competitor

• Accepting a moderate gift from a customer of his/her organization

In which of the following situations would an auditor potentially lack objectivity?

• A former purchasing assistant performs a review of internal controls over purchasing four months after being transferred to the internal audit activity.

• An auditor recommends standards of control and performance measures for a contract with a service organization for the processing of payroll and employee benefits.

• An auditor reviews the procedures for a new electronic data interchange connection to a major customer before it is implemented.

• A payroll accounting employee assists an auditor in verifying the physical inventory of small motors.

Which of the following is not true with regard to the internal audit charter?

• It specifies the minimum resources needed for the internal audit activity.

• It should be approved by senior management and the board.

• It provides a basis for evaluating the internal audit activity.

• It defines the authorities and responsibilities for the internal audit activity.

Internal auditors are conducting an on-site internal audit of a company subsidiary. The materials collected and examined are confidential. To safeguard this classified information properly, the internal auditors should

• Allow access only to audit personnel.

• Prevent all auditee personnel from viewing any of the materials.

• Deny the external auditor access to the data.

• Allow the materials to be reviewed by others only with approval of the auditee.

According to the Standards, which of the following is not a consideration when exercising due professional care for an assurance engagement?

A. The relative complexity, materiality, or significance of matters to which assurance procedures are applied.

B. The extent of assurance services necessary to ensure that all risks are identified.

C. The cost of providing the assurance services in relation to potential benefits.

D. The probability of significant errors, irregularities or instances of noncompliance.

• A

• B

• C

• D

In which of the following circumstances is it apparent that the internal auditor exercised due professional care in carrying out his duties?

1.The internal auditor weighed the cost of the engagement against its potential benefits.

2.The internal auditor used anonymous information from a whistleblower to

report the existence of fraudulent activity.

3.The internal auditor found minor and major instances of fraud and highlighted only the major instances in its report, in consideration of the board's limited time.

4.The internal auditor decided to use new auditing software to assist with the statistical analysis required during the engagement.

• 1 and 2 only

• 2 and 3 only

• 1 and 4 only

• 3 and 4 only