IIA-CHAL-QISA Free Practice Test

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.

An internal audit activity has to confirm the validity of the activities reported by a grantee that received a chantable contribution from the organization Which of the following methods would best help meet this objective?

1. A. Visiting the grantee to assess whether the execution of the project was in line with the defined grant scope.
2. B. Verifying that the grantee's final report is in line with what was depicted in the initial budget request.
3. C. Reconciling general ledger accounts used by management of the area under review for reflecting expenses on charitable contributions
4. D. Interviewing employees of the corporate affairs department, which is responsible for charitable activities

Correct Answer: A
✑ Introduction:
✑ Effective Verification Methods:
✑ Options Analysis:
✑ Conclusion:
:
Internal Audit Standards and Practice Guides .

Which of the following is most likely to impair the organizational independence of the internal audit activity?

1. A. The chief audit executive (CAE) reports administratively to the chief financial officer
2. B. The CAE oversees the effectiveness of the organization??s risk management function.
3. C. The CAE reports functionally to the CEO.
4. D. The CAE managed the finance department for the past five years.

Correct Answer: D
✑ Impairment of Independence: The organizational independence of the internal audit activity can be impaired if the CAE has had significant roles in management, such as managing the finance department. This prior involvement may create a conflict of interest or perceived bias.
✑ IIA Standards on Independence: The IIA emphasizes the importance of independence and objectivity in internal auditing. Any prior management role, especially in the department being audited, can compromise the CAE's objectivity.
✑ Examples of Impairment:
: IIA Standard 1100 - Independence and Objectivity.

Which of the following offers the best explanation of why the auditor in charge would assign a junior auditor to complete a complex part of the audit engagement?

1. A. The senior auditors are unavailable, as they are currently working on other portions of the engagement
2. B. The auditor in charge believes that the junior auditor should obtain a specific type of experience.
3. C. The audit engagement has a tight deadline and the work must be completed timely.
4. D. The auditor in charge is unable to identify audit staff with all of the required skills needed to complete the engagement

Correct Answer: B
Assigning a junior auditor to complete a complex part of an audit engagement can be a strategic decision aimed at providing the junior auditor with valuable experience. This exposure to complex tasks helps in their professional development, building their skills and knowledge for future responsibilities. Although tight deadlines or the unavailability of senior auditors might be factors, the primary reason is often to enhance the junior auditor's competence and career growth.

Which of the following offers the best evidence that the internal audit activity has achieved organizational independence?

1. A. An independent third party has assessed the organization's system of internal controls to be adequate and effective.
2. B. The chief audit executive reports both functionally and administratively to the CEO
3. C. The internal audit charter is drafted properly and approved by the appropriate parties.
4. D. The mission statement and strategy of the internal audit activity demonstrates alignment to organizational objectives

Correct Answer: C
The internal audit charter is a formal document that defines the internal audit activity's purpose, authority, and responsibility. It is crucial for establishing the internal audit function's independence and objectivity. When the internal audit charter is properly drafted and approved by the appropriate parties, it provides a clear mandate for the internal audit activity and sets the foundation for its operations. This ensures that the internal audit activity can function independently without undue influence from management.
: According to the IIA's International Standards for the Professional Practice of Internal
Auditing (Standards), specifically Standard 1000 (Purpose, Authority, and Responsibility), the internal audit charter is essential in defining the internal audit activity's role and ensuring its independence.