IIA-CHAL-QISA Free Practice Test

In the years after the mid-service point of a depreciable asset, which of the following depreciation methods will result in the highest depreciation expense?

1. A. Sum of the years?? digits.
2. B. Declining balance.
3. C. Double-declining balance.
4. D. Straight line.

Correct Answer: C
Depreciation methods allocate the cost of an asset over its useful life. Different methods
impact the depreciation expense reported each year.
✑ Option A: Sum of the years?? digits.
✑ Option B: Declining balance.
✑ Option C: Double-declining balance.
✑ Option D: Straight line.
Reference:
As per accounting principles and guidelines (e.g., GAAP and IFRS), the double-declining balance method is a form of accelerated depreciation that provides higher depreciation expenses earlier in the life of an asset. This method applies a constant rate of depreciation to the declining book value of the asset each year, which is why it results in the highest depreciation expense after the mid-service point.

A bakery chain has a statistical model that can be used to predict daily sales at individual stores based on a direct relationship to the cost of ingredients used and an inverse relationship to rainy days What conditions would an auditor look for as an Indicator of employee theft of food from a specific store?

1. A. On a rainy da
2. B. total sales are greater than expected when compared to the cost of ingredients used
3. C. On a sunny da
4. D. total sales are less than expected when compared to the cost of ingredients used.
5. E. Both total sales and cost of ingredients used are greater than expected.
6. F. Both total sales and cost of ingredients used are less than expected.

Correct Answer: A
The statistical model indicates that daily sales have a direct relationship with the cost of ingredients used and an inverse relationship with rainy days.
✑ Option A: On a rainy day, if total sales are greater than expected compared to the
cost of ingredients used, it may indicate discrepancies that could be a sign of employee theft. For instance, if ingredients are used but not reflected in the sales, it suggests that items might be missing (stolen).
✑ Option B: On a sunny day, lower-than-expected sales compared to the cost of
ingredients could indicate wastage but not necessarily theft.
✑ Option C and D: Both scenarios where total sales and the cost of ingredients are higher or lower than expected do not specifically point to theft without additional context.

According to IIA guidance, which of the following statements is true regarding reporting the results of the quality assurance and improvement program?

1. A. Results of internal assessments need to be reported to the board at least once every five years.
2. B. The external assessor must present the findings from the external assessment to senior management and the board upon completion.
3. C. Deficiencies within the internal audit activity must be reported to the board as soon as they are noted
4. D. Results of ongoing monitoring of the internal audit activity??s performance must be reported to senior management and the board at least annually

Correct Answer: D
The IIA's International Standards for the Professional Practice of Internal Auditing (Standards) provide guidance on the reporting requirements of the quality assurance and improvement program. According to Standard 1320, "The chief audit executive must communicate the results of the quality assurance and improvement program to senior management and the board." This communication must include the results of both internal and external assessments and ongoing monitoring. Specifically, the results of ongoing monitoring of the internal audit activity??s performance should be reported to senior management and the board at least annually. This ensures that the internal audit activity maintains its proficiency, enhances its effectiveness, and complies with the Standards.
Reference: IIA Standard 1320