IIA-CHAL-QISA Free Practice Test

According to IIA guidance, which of the following activities are typically primary objectives of engagement supervision?

1. A. Enable training and development of staff, identify engagement objectives, and assign responsibilities to individual auditors.
2. B. Identify engagement objectives, assign responsibilities to individual auditors, and approve the engagement program.
3. C. Assign responsibilities to individual auditors, approve the engagement program, and enable training and development of staff.
4. D. Approve the engagement program, enable training and development of staff, and identify engagement objectives

Correct Answer: C
Engagement Supervision Objectives:
✑ Assign Responsibilities: Supervisors must clearly assign tasks and responsibilities to individual auditors to ensure clarity and accountability during the engagement.
✑ Approve Engagement Program: The supervisor is responsible for reviewing and approving the engagement program, ensuring that it aligns with the engagement objectives and internal audit standards.
✑ Training and Development: Supervision also involves mentoring and developing audit staff, providing guidance and feedback to enhance their skills and performance.
IIA Standards:
✑ Standard 2340 – Engagement Supervision: Internal audit engagements must be properly supervised to ensure objectives are achieved, quality is maintained, and staff are developed.
Primary Objectives:
✑ Clarity and Accountability: Assigning responsibilities ensures that each auditor
knows their role and tasks.
✑ Quality and Compliance: Approving the engagement program ensures that the audit plan is robust and compliant with standards.
✑ Professional Development: Enabling training and development helps build a competent and skilled audit team.
References:
✑ Effective engagement supervision involves assigning responsibilities, approving the engagement program, and facilitating training and development, ensuring a successful audit engagement and continuous staff improvement.

Which of the following statements is true regarding managements use of judgement to design, implement, and conduct internal control?

1. A. The use of judgment enhances managements ability to make better decisions about internal control, but cannot guarantee perfect outcomes.
2. B. introducing judgment generally diminishes managements ability to make good decisions about internal control
3. C. It is inappropriate for management to exercise judgement in areas such as specifying and using suitable accounting principles.
4. D. It is inappropriate for management to exercise judgement in assessing whether components are present, functioning, and operating together

Correct Answer: A
Management's use of judgment in designing, implementing, and conducting internal control is crucial for adapting to unique circumstances and complexities within an organization.
✑ Enhanced Decision-Making: Judgment allows management to tailor controls to the
specific risks and operational realities of the organization, improving overall effectiveness.
✑ Limitations: While judgment improves decision-making, it cannot eliminate all risks
or guarantee perfect outcomes due to inherent uncertainties and limitations in predicting all possible scenarios.
✑ Appropriate Use: It is appropriate for management to use judgment in applying
accounting principles and assessing internal controls' presence and functioning.
✑ Inappropriateness: It would be incorrect to say that judgment diminishes decision- making capabilities or is inappropriate for assessing internal control components.
References:
✑ "Internal Control – Integrated Framework" by COSO, which highlights the importance and limitations of judgment in internal control processes.

The chief audit executive (CAE) has assigned an internal auditor to an upcoming engagement. Which of the following requirements would most likely indicate that the Internal auditor wasassigned to an assurance engagement?

1. A. The assigned internal auditor must determine the objectives, scope, and techniques of the engagement.
2. B. The CAE must personally obtain the needed skills, knowledge, or other competencies if the internal auditor does not have them.
3. C. The assigned internal auditor must not assume management responsibilities while performing the engagement.
4. D. The assigned internal auditor must maintain objectivity while performing the engagement

Correct Answer: C
✑ Introduction:
✑ Role of Internal Auditors in Assurance Engagements:
✑ Options Analysis:
✑ Conclusion:
:
Internal Audit Standards and Practice Guides

An organization invests excess short-term cash in trading securities Which of the following actions should an internal auditor take to test the valuation of those securities'*

1. A. Use the equity method to recalculate the investment carrying value
2. B. Confirm the securities held by the broker.
3. C. Perform a calculation of premium or discount amortization.
4. D. Compare the carrying value with current market quotations

Correct Answer: D
✑ Testing Valuation:The valuation of trading securities requires comparing their carrying value with current market prices to ensure accuracy.
✑ Market Quotations:Current market quotations provide the most reliable and up-to- date information on the fair value of securities.
✑ Accounting Standards:This approach is consistent with accounting standards that require securities to be reported at fair value, reflecting any unrealized gains or losses.
✑ Verification Process:Comparing the carrying value with market quotations helps verify that the securities are appropriately valued on the financial statements.
References:
✑ International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP) regarding fair value measurement.

Which of the following must be in existence as a precondition to developing an effective system of internal controls?

1. A. A monitoring process
2. B. A risk assessment process.
3. C. A strategic objective-setting process.
4. D. An information and communication process

Correct Answer: B
✑ Risk Assessment Process: A risk assessment process is essential for identifying, analyzing, and managing risks that could prevent the achievement of objectives. It is a critical component in developing an effective system of internal controls.
✑ COSO Framework: The Committee of Sponsoring Organizations (COSO) Internal Control Framework outlines risk assessment as a fundamental part of internal control systems.
✑ Other Preconditions:
:
COSO Internal Control Framework.