IIA-CHAL-QISA Free Practice Test

Which of the following documents are internal auditors most likely to be asked to sign as a demonstration of due professional care?

1. A. A description of their job responsibilities.
2. B. A non-disclosure agreement
3. C. An annual declaration of commitment to The HAs Code of Ethics.
4. D. The internal audit charter

Correct Answer: C
✑ Professional Responsibility:Internal auditors are expected to demonstrate their commitment to professional standards and ethics.
✑ Code of Ethics:The IIA??s Code of Ethics outlines principles that internal auditors must follow, including integrity, objectivity, confidentiality, and competency.
✑ Annual Declaration:Signing an annual declaration reinforces the auditor's commitment to these principles and ensures ongoing adherence to the professional standards.
✑ Demonstration of Due Care:By signing this declaration, auditors formally acknowledge their responsibility to uphold ethical standards, which is a demonstration of due professional care.
References:
✑ The IIA??s Code of Ethics.
✑ The IIA??s International Standards for the Professional Practice of Internal Auditing.

During an assurance engagement an internal auditor uses benchmarking research to support preparation of a report to stakeholders that contains significant findings about control deficiencies. Which of the following skills did the auditor demonstrate?

1. A. Internal audit management
2. B. Conflict negotiation.
3. C. Critical thinking
4. D. Persuasion and collaboration

Correct Answer: C
✑ Benchmarking Research:Utilizing benchmarking research to support the preparation of a report demonstrates the auditor??s ability to analyze data, compare performance, and identify control deficiencies.
✑ Critical Thinking:This skill involves evaluating and interpreting data to make informed judgments and recommendations, which is essential for identifying significant findings and control deficiencies.
✑ Application in Auditing:Critical thinking helps auditors assess the effectiveness of
controls and develop recommendations based on evidence and comparative analysis.
References:
✑ The role of critical thinking in internal auditing as emphasized by the IIA .

A newly appointed chief audit executive (CAE) started analyzing the organization's policies in an attempt to customize them to address internal audit specifics. Which of the following organizationwide practices is most likely to be acceptable to the CAE?

1. A. Internal auditors' performance evaluation is primarily based on both client satisfaction surveys and cost savings identified from the audits
2. B. Standard training for each employee, including internal auditors, is 10 hours per year.
3. C. To enhance efficiency, Internal auditors should not be rotated regularly among engagements
4. D. Hiring practices include requiring potential auditors to disclose any significant stock ownership in the organization.

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

According to IIA guidance, which of the following statements is true regarding due professional care?

1. A. Internal auditors must exercise due professional care to ensure that all significant risks will be identified.
2. B. Internal auditors must apply the care and skill expected of a reasonably prudent and competent internal auditor.
3. C. Due professional care requires the internal auditor to conduct extensive examinations and verifications to ensure fraud does not exist.
4. D. Due professional care is displayed during a consulting engagement when the internal auditor focuses on potential benefits of the engagement rather than the cost

Correct Answer: B
Due professional care is a critical concept in internal auditing, ensuring that auditors conduct their work with the necessary diligence and competence.
✑ Definition and Standards:According to the IIA??s International Standards for the
Professional Practice of Internal Auditing (Standards), specifically Standard 1220 – Due Professional Care, internal auditors must apply the care and skill expected of a reasonably prudent and competent internal auditor.
Reference:Standard 1220 emphasizes that internal auditors must consider the extent of work needed to achieve the engagement's objectives and the cost of assurance in relation to potential benefits.
Expectation of Competence:The standard requires auditors to use their professional judgment and to exercise the level of skill and care that a reasonably prudent internal auditor would use in similar circumstances.
Practical Example:This includes evaluating the nature and complexity of the engagement, the adequacy and effectiveness of risk management, and control processes relevant to the engagement.
Comprehensive, Not Excessive:While due professional care involves being thorough, it does not mandate exhaustive procedures such as those implied in options A and C.
Clarification:Option A overstates the requirement by implying that all significant risks must be identified, which is not always feasible.
Clarification:Option C misinterprets due professional care by suggesting that extensive examinations and verifications to ensure fraud does not exist are always necessary, which is beyond the typical scope of many audits.
Cost vs. Benefit in Consulting:Option D refers to consulting engagements and the consideration of benefits over cost, which is a part of due professional care but does not capture the comprehensive expectation of care and skill.
Clarification:Due professional care in consulting engagements is about balancing benefits and costs but also involves ensuring quality and thoroughness appropriate to the engagement's objectives.
Conclusion:The correct answer is B, as it accurately reflects the IIA??s guidance that internal auditors must apply the care and skill expected of a reasonably prudent and competent internal auditor.