IIA-CHAL-QISA Free Practice Test

With regard to project management, which of the following statements about project crashing is true?

1. A. It leads to an increase in risk and often results in rework.
2. B. It is an optimization technique where activities are performed in parallel rather than sequentially
3. C. It involves a revaluation of project requirements and/or scope.
4. D. It is a compression technique in which resources are added to the project

Correct Answer: D
Project crashing is a schedule compression technique used in project management to shorten the project duration without changing the project scope. It involves adding additional resources to critical path activities to complete them faster. This method can lead to increased costs but aims to reduce the project timeline effectively. Crashing is often used when project deadlines are tight and time is more critical than budget.
: Project Management Institute (PMI) defines project crashing as a technique used to
shorten the schedule duration for the least incremental cost by adding resources. This is detailed in the PMBOK Guide (Project Management Body of Knowledge).

When is an organic organizational structure likely to be more successful than a mechanistic organizational structure?

1. A. When a manufacturing organization has stable demand for its products.
2. B. When an organization is subjected to strong political and social pressures
3. C. When a manufacturer has reliable resources and suppliers.
4. D. When an organization is infrequently affected by technological advances

Correct Answer: B
An organic organizational structure is more flexible and adaptive compared to a mechanistic structure. It is characterized by less formalization, decentralized decision- making, and a greater reliance on lateral communication. This type of structure is beneficial in environments that are dynamic and uncertain, such as when an organization faces strong political and social pressures. The flexibility of an organic structure allows the organization to respond more effectively to external changes and pressures.
: This concept is supported by organizational theory literature, which suggests that organic
structures are better suited for turbulent and changing environments where quick adaptation is necessary.

What would be the effect if an organization paid one of its liabilities twice during the year, in error?

1. A. Assets, liabilities, and owners' equity would be understated.
2. B. Assets, net income, and owners?? equity would be unaffected
3. C. Assets and liabilities would be understated.
4. D. Assets, net income, and owners?? equity would be understated, but liabilities would be overstated

Correct Answer: D
If an organization pays one of its liabilities twice, its assets (cash) would be reduced more than necessary. This results in an understatement of net income and owners?? equity because the additionalpayment is an expense that should not have been recorded. Liabilities would be overstated because the duplicate payment does not reduce the liability correctly.
References:
✑ "Financial Accounting Principles," which discusses the impact of errors on financial statements.

During a payroll audit, the internal auditor discovered that several individuals who have the same position classification as the are earning a significantly higher salary. The auditor noted the names and amounts of each; and he planned to prepare a request to the chief audit executive for a salary Increase based on this Information. Which of the following IIA Code of Ethics principles was violated in this scenario?

1. A. Competency.
2. B. Objectivity.
3. C. integrity
4. D. Confidentiality

Correct Answer: B
When internal audit resources are limited, it is crucial to focus on the most critical aspects of the control environment. Preventive key controls are designed to prevent errors or irregularities from occurring, which are essential for maintaining a strong control environment. Given the mature control environment of the organization, prioritizing preventive key controls ensures that potential issues are addressed before they materialize, providing a proactive approach to risk management.
Reference: IIA Practice Guide "Assessing the Adequacy of Internal Controls"

Which of the following best describes the guideline for preparing audit engagement workpapers?

1. A. Workpapers should be understandable to the auditor in charge and the chief audit executive
2. B. Workpapers should be understandable to the audit client and the board.
3. C. Workpapers should be understandable to another internal auditor who was not involved in the engagement.
4. D. Workpapers should be understandable to external auditors and regulatory agencies

Correct Answer: C
The guidelines for preparing audit engagement workpapers emphasize clarity, completeness, and accuracy to ensure that they can be easily understood and used by others within the auditing function.
✑ Option A: Workpapers should be understandable to the auditor in charge and the chief audit executive.
✑ Option B: Workpapers should be understandable to the audit client and the board.
✑ Option C: Workpapers should be understandable to another internal auditor who was not involved in the engagement.
✑ Option D: Workpapers should be understandable to external auditors and regulatory agencies.
Reference:
According to the Institute of Internal Auditors (IIA) International Standards for the Professional Practice of Internal Auditing (Standards), Standard 2330 - "Documenting Information," internal auditors must document relevant information to support the conclusions and engagement results. The documentation must be sufficiently detailed to allow another internal auditor with no previous connection to the engagement to
understand the work performed, evidence obtained, and conclusions reached.