IIA-CHAL-QISA Free Practice Test

Which of the following should be included in a company's year-end inventory valuation?

1. A. Company goods that were sold during the year, free on board shipping point, that have been shipped but not yet received by the customer
2. B. Goods purchased by the company, free on board destination, that have not yet been received.
3. C. Goods on consignment, which the company is trying to sell for its customers.
4. D. Company goods for sale on consignment at a consignment shop

Correct Answer: D
Year-end inventory valuation should include all goods owned by the company, regardless of their location. This includes goods for sale on consignment at a consignment shop, as these items remain the property of the company until sold. Goods sold FOB shipping point and goods purchased FOB destination that have not yet been received are not included, as ownership has transferred or not yet been acquired respectively. Goods on consignment that the company is trying to sell for others are also excluded because the company does not own them

What is the primary reason that audit supervision includes approval of the engagement report?

1. A. To ensure the objectives of the area under review are met
2. B. To ensure senior management supports the reports conclusions
3. C. To ensure report style and grammar are appropriate.
4. D. To ensure report findings are substantiated

Correct Answer: D
The primary reason for audit supervision, including the approval of the engagement report, is to ensure that the findings presented in the report are substantiated by adequate and appropriate evidence. This step is crucial to maintain the credibility and reliability of the audit process and its outcomes.
✑ Substantiation of Findings: Ensuring that findings are substantiated helps in
providing a clear and defensible basis for the conclusions and recommendations made in the report.
✑ Audit Quality: This step ensures the quality and integrity of the audit process,
confirming that the evidence collected during the audit is sufficient and appropriate to support the findings.
✑ Credibility: By substantiating findings, the report gains credibility, which is essential
for the stakeholders who rely on the audit report for decision-making.
References:
✑ "Internal Audit Standards and Procedures," which outlines the importance of evidence substantiation in audit reports .

Which of the following resources would be most effective for an organization that would like to improve how it informs stakeholders of its social responsibility performance?

1. A. ISO 26000
2. B. Global Reporting Initiative.
3. C. Open Compliance and Ethics Group.
4. D. COSO??s enterprise risk management framework.

Correct Answer: B
✑ Understanding the GRI:The Global Reporting Initiative (GRI) provides a comprehensive framework for reporting on sustainability performance, including social responsibility aspects.
✑ Framework and Standards:GRI standards are widely used and recognized globally, which helps organizations benchmark their performance against other entities using the same framework.
✑ Stakeholder Communication:The GRI framework emphasizes transparency and accountability in reporting, making it an effective tool for informing stakeholders about an organization's social responsibility performance.
✑ Comprehensive Coverage:GRI covers various aspects of social responsibility, including economic, environmental, and social impacts, providing a holistic view of an organization's performance.
References:
✑ The Global Reporting Initiative (GRI) .

At a conference an internal auditor presented a new computer-assisted audit technique developed by his organization The presentation included sample data derived from performing audit engagements for the organization. Travel costs were paid by the conference organizers and the trip was approved by the chief audit executive (CAE). However, neither management nor the CAE was aware that the internal auditor would be
making a presentation based on work completed for the organization According to IIA guidance, which of the following statements is most relevant regarding the actions of the auditor?

1. A. The auditor did not violate the standard of objectivity because the presentation had no impact on the organization.
2. B. The auditor violated the principle of confidentiality by disclosing information about the organization without approval.
3. C. The auditor should have obtained permission before using the material, but did not violate the IIA Code of Ethics or Standards
4. D. The auditor breached the conflict of interest standard by accepting payment for travel costs

Correct Answer: B
Understanding Confidentiality: According to the IIA Code of Ethics, internal auditors are required to respect the value and ownership of information they receive and not disclose information without appropriate authority unless there is a legal or professional obligation to do so.
Presentation Details: In this scenario, the internal auditor presented sample data derived from audit engagements performed for the organization. Even though the travel costs were covered by the conference organizers and the trip was approved by the CAE, neither the CAE nor management was aware of the specific content of the presentation.
Violation of Confidentiality: By disclosing information related to the organization's audit engagements without prior approval from management or the CAE, the auditor breached the confidentiality principle. The auditor should have sought permission before using and presenting any material related to the organization's internal operations.
IIA Standards: Standard 1310 – Requirements of the Quality Assurance and Improvement Program – states that internal auditors must adhere to the IIA's Code of Ethics and Standards. This includes maintaining confidentiality and obtaining necessary approvals before disclosing any organizational information.
References:
✑ The principle of confidentiality is clearly violated when information is shared without proper authorization, regardless of the perceived impact on the organization. The IIA Code of Ethics emphasizes the importance of obtaining appropriate permissions to prevent unauthorized disclosures.

According to IIA guidance, which of the following statements is true regarding engagement planning?

1. A. For both assurance and consulting engagements, planning typically occurs after the engagement objectives and scope have already been determined.
2. B. The expectations and objectives of an assurance engagement are usually determined b
3. C. or in conjunction with, the engagement client
4. D. Internal auditors may not need to complete a preliminary risk assessment for a consulting engagement as they would when planning an assurance engagement.
5. E. For both consulting and assurance engagements, internal auditors usually form the engagement objectives prior to completing the preliminary risk assessment

Correct Answer: B
The expectations and objectives of an assurance engagement are often determined in conjunction with the engagement client, aligning with the client's needs and the scope of the engagement. In consulting engagements, internal auditors provide advice and services
tailored to the client's requests, which may not always follow a preliminary risk assessment process like in assurance engagements.
: The IIA??s International Standards for the Professional Practice of Internal Auditing
(Standards) provide detailed guidance on this aspect of engagement planning, particularly in Standards 2200 and 2201.