IIA-CHAL-QISA Free Practice Test

Organizations that adopt just-in-time purchasing systems often experience which of the following?

1. A. A slight increase in carrying costs.
2. B. A greater need for inspection of goods as the goods arrive
3. C. A greater need for linkage with a vendors computerized order entry system.
4. D. An Increase in the number of suitable suppliers

Correct Answer: C
Just-in-time (JIT) purchasing systems aim to minimize inventory levels by receiving goods only as they are needed in the production process, which requires tight integration with suppliers.
✑ Vendor Linkage: JIT systems demand a highly efficient and responsive supply
chain. Linking with vendors' computerized order entry systems ensures that orders are processed quickly and accurately, supporting the JIT philosophy.
✑ Inspection: JIT systems often rely on high-quality suppliers to minimize the need
for inspection upon arrival, focusing instead on preventive measures at the supplier's end.
✑ Carrying Costs: A JIT system typically reduces carrying costs by keeping inventory
levels low.
✑ Supplier Base: The focus is often on a few reliable suppliers rather than increasing the number of suppliers.
References:
✑ "Supply Chain Management: Strategy, Planning, and Operation," which discusses the operational requirements and benefits of JIT systems.

According to ISO 31000, which of the following statements is correct?

1. A. The board is responsible for setting the organizational attitude through tone at the top.
2. B. The internal audit activity will provide assurance over operating effectiveness but not over the design of risk management activities
3. C. The internal audit activity can give objective assurance on any part of the risk management framework for which it is responsible.
4. D. The framework is designed to be effective for organizations no matter how small.

Correct Answer: D
According to ISO 31000, the risk management framework is scalable and applicable to organizations of all sizes, including small entities. The framework's principles are designed to be flexible and adaptable, ensuring they can be effectively implemented regardless of the organization's size.
✑ Scalability: The principles and guidelines of ISO 31000 can be tailored to fit the
specific context, resources, and complexity of any organization, making it a universal standard.
✑ Flexibility: The framework supports organizations in integrating risk management
practices into their operations at a level that suits their size and complexity.
✑ Effectiveness: Regardless of the organization's size, the framework aims to enhance risk management practices and support better decision-making.
References:
✑ "ISO 31000: Risk Management Guidelines," which outlines the applicability and flexibility of the framework for all organizations .

An internal audit activity maintains a quality assurance and improvement program that includes annual self-assessments The internal audit activity includes in each engagement report a clause that the engagement is conducted in conformance with the International Standards for the Professional Practice of Internal Auditing (Standards). Which of the following justifies inclusion of this clause in the reports?

1. A. Internal audit activity policies and engagement records provide relevant, sufficient, and competent evidence that the statement is correct.
2. B. The audit committee has reviewed the annual self-assessment results and approved the use of the clause.
3. C. The self-assessment results were validated by a qualified external review team three years prior.
4. D. The internal audit charter, approved by the audit committee, requires conformance withthe Standards

Correct Answer: C
According to the IIA Standards, an internal audit activity must have an external assessment conducted at least once every five years by a qualified, independent reviewer or review team from outside the organization. The validation by an external team ensures that the internal audit activity's self-assessments and quality assurance practices meet the required standards.
: IIA Standard 1312 (External Assessments) and IIA Standard 1320 (Reporting on the
Quality Assurance and Improvement Program) provide detailed guidelines for this process.

According to IIA guidance, which of the following actions by the chief audit executive would best ensure that internal auditors demonstrate due professional care?

1. A. Developing policies and procedures for the internal audit activity
2. B. Ensuring the internal audit activity is not found fallible during audit engagements.
3. C. Undertaking all engagements that management requests of the internal audit activity.
4. D. Ensuring the internal audit activity reports functionally to the board of directors

Correct Answer: A
✑ Professional Care:Ensuring that internal auditors demonstrate due professional care involves establishing clear policies and procedures that guide their activities.
✑ Guidance and Standards:These policies and procedures help ensure that the internal audit activity adheres to professional standards and best practices.
✑ Standard Compliance:According to the IIA??s Performance Standard 2040 – Policies and Procedures, the CAE must establish policies and procedures to guide the internal audit activity.
✑ Quality Assurance:Properly developed policies and procedures contribute to the overall quality and effectiveness of the internal audit activity, ensuring that engagements are conducted with due professional care.
References:
✑ IIA Standard 2040 – Policies and Procedures .

Which of the following best describes why an internal audit activity would consider sending written preliminary observations to the audit client?

1. A. Written observations allow for more interpretation.
2. B. Written observations help the internal auditors express the significance.
3. C. Written and verbal observations are equally effective.
4. D. Written observations limit premature agreement

Correct Answer: C
Audit workpapers are essential documents that provide evidence of the audit work performed and the conclusions reached.
✑ Option A: While review notes can be useful, they do not need to be retained if they
do not add value to the audit evidence.
✑ Option B: Audit workpaper documentation policies are typically established by the internal audit department, not reviewed or approved by the audit committee.
✑ Option C: Management should not review the workpapers for accuracy as this could compromise the independence of the audit.
✑ Option D: Preparing workpapers helps auditors document their work thoroughly, facilitating learning and professional development.