CIA TEST PRACTICE QUESTIONS AND
ACCURATE ANSWERS 2026/2027
Internal control can provide only reasonable assurance that the organization's
objectives will be met efficiently and effectively. One factor limiting the likelihood of
achieving those objectives is that
A) The internal auditor's primary responsibility is the detection of fraud.
B) The board is active and independent.
C) Management monitors performance.
D) The cost of internal control should not exceed its benefits. - ANSWER-D) The cost of
internal control should not exceed its benefits.
An internal auditor is examining inventory control in a merchandising division with
annual sales of US $3,000,000 and a 40% gross profit rate. Tests show that 2% of the
monetary amount of purchases do not reach inventory because of breakage and
employee theft. Adding certain controls costing US $35,000 annually could reduce
these losses to .5% of purchases. Should the controls be recommended?
A) No, because the cost of the added controls exceeds the projected savings.
B) Yes, regardless of cost-benefit considerations, because the situation involves
employee theft.
C) Yes, because the ideal system of internal control is the most extensive one.
D) Yes, because the projected saving exceeds the cost of the added controls. -
ANSWER-A) No, because the cost of the added controls exceeds the projected
savings.
The procedure requiring preparation of a prelisting of incoming cash receipts, with
copies of the prelist going to the cashier and to accounting, is an example of which type
of control?
A) Detective.
B) Preventive.
C) Corrective.
D) Directive. - ANSWER-B) Preventive.
An adequate and effective system of internal control provides reasonable assurance
that objectives will be achieved. Controls may be preventive, detective, or directive.
Which of the following is a detective control for the procurement function?
A) Goods received are counted and compared with quantities on purchase order and
receiving reports.
B) Review and approval of each procurement action is required prior to the final
issuance of a purchase order.
,C) Prenumbered standard purchase order forms include all relevant terms required to
be used in all applicable instances.
D) The procurement function is organizationally separate from receiving, disbursing,
and accounting. - ANSWER-A) Goods received are counted and compared with
quantities on purchase order and receiving reports.
Of the following, the controls that are often difficult for internal auditors to evaluate
because of the lack of criteria or standards are
A) Operating controls.
B) Financial controls.
C) Preventive controls.
D) Corrective controls. - ANSWER-A) Operating controls.
The requirement that purchases be made from suppliers on an approved vendor list is
an example of a
A) Monitoring control.
B) Detective control.
C) Preventive control.
D) Corrective control. - ANSWER-C) Preventive control.
According to COSO, which of the following is the most effective method to transmit a
message of ethical behavior throughout an organization?
A) Removing pressures to meet unrealistic targets, particularly for short-term results.
B) Demonstrating appropriate behavior by example.
C) Specifying the competence levels for every job in an organization and translating
those levels to requisite knowledge and skills.
D) Strengthening internal audit's ability to deter and report improper behavior. -
ANSWER-B) Demonstrating appropriate behavior by example.
An organization's directors, management, and internal auditors all have important roles
in creating a proper control environment. Senior management is primarily responsible
for
A) Implementing and monitoring controls designed by the board of directors.
B) Establishing a proper ethical culture.
C) Designing and operating a control system that provides reasonable assurance that
established objectives and goals will be achieved.
D) Ensuring that external and internal auditors adequately monitor the control
environment. - ANSWER-B) Establishing a proper ethical culture.
According to The IIA Glossary appended to the Standards, which of the following are
most directly designed to ensure that risks are contained?
A) Risk management processes.
, B) Control processes.
C) Governance processes.
D) Internal audit activities. - ANSWER-B) Control processes.
The primary responsibility for establishing and maintaining internal control rests with
A) Management.
B) The controller or the treasurer.
C) The external auditors.
D) The internal auditors. - ANSWER-A) Management.
Which of the following is most likely to be performed in the control activities component
of internal control?
A) Assessing fraud risks.
B) Information processing.
C) Ongoing evaluations.
D) Segregation of duties. - ANSWER-D) Segregation of duties.
Effective internal control
A) Assists with the safeguarding of assets.
B) Is unaffected by changing circumstances and conditions encountered by the
organization.
C) Eliminates risk and potential loss to the organization.
D) Cannot be circumvented by management. - ANSWER-A) Assists with the
safeguarding of assets.
The PCAOB's AS 2201 states that internal controls may be preventive or detective.
Which of the following controls is preventive?
A) Using batch totals.
B) Preparing bank reconciliations.
C) Requiring two persons to open mail.
D) Reconciling the accounts receivable subsidiary file with the control account. -
ANSWER-C) Requiring two persons to open mail.
Which of the following are included in the control environment described in the COSO
internal control framework?
A) Competence of personnel, backup facilities, laws, and regulations.
B) Organizational structure, management philosophy, and planning.
C) Risk assessment, assignment of responsibility, and human resource practices.
D) Integrity and ethical values, assignment of authority, and human resource policies. -
ANSWER-D) Integrity and ethical values, assignment of authority, and human resource
policies.
ACCURATE ANSWERS 2026/2027
Internal control can provide only reasonable assurance that the organization's
objectives will be met efficiently and effectively. One factor limiting the likelihood of
achieving those objectives is that
A) The internal auditor's primary responsibility is the detection of fraud.
B) The board is active and independent.
C) Management monitors performance.
D) The cost of internal control should not exceed its benefits. - ANSWER-D) The cost of
internal control should not exceed its benefits.
An internal auditor is examining inventory control in a merchandising division with
annual sales of US $3,000,000 and a 40% gross profit rate. Tests show that 2% of the
monetary amount of purchases do not reach inventory because of breakage and
employee theft. Adding certain controls costing US $35,000 annually could reduce
these losses to .5% of purchases. Should the controls be recommended?
A) No, because the cost of the added controls exceeds the projected savings.
B) Yes, regardless of cost-benefit considerations, because the situation involves
employee theft.
C) Yes, because the ideal system of internal control is the most extensive one.
D) Yes, because the projected saving exceeds the cost of the added controls. -
ANSWER-A) No, because the cost of the added controls exceeds the projected
savings.
The procedure requiring preparation of a prelisting of incoming cash receipts, with
copies of the prelist going to the cashier and to accounting, is an example of which type
of control?
A) Detective.
B) Preventive.
C) Corrective.
D) Directive. - ANSWER-B) Preventive.
An adequate and effective system of internal control provides reasonable assurance
that objectives will be achieved. Controls may be preventive, detective, or directive.
Which of the following is a detective control for the procurement function?
A) Goods received are counted and compared with quantities on purchase order and
receiving reports.
B) Review and approval of each procurement action is required prior to the final
issuance of a purchase order.
,C) Prenumbered standard purchase order forms include all relevant terms required to
be used in all applicable instances.
D) The procurement function is organizationally separate from receiving, disbursing,
and accounting. - ANSWER-A) Goods received are counted and compared with
quantities on purchase order and receiving reports.
Of the following, the controls that are often difficult for internal auditors to evaluate
because of the lack of criteria or standards are
A) Operating controls.
B) Financial controls.
C) Preventive controls.
D) Corrective controls. - ANSWER-A) Operating controls.
The requirement that purchases be made from suppliers on an approved vendor list is
an example of a
A) Monitoring control.
B) Detective control.
C) Preventive control.
D) Corrective control. - ANSWER-C) Preventive control.
According to COSO, which of the following is the most effective method to transmit a
message of ethical behavior throughout an organization?
A) Removing pressures to meet unrealistic targets, particularly for short-term results.
B) Demonstrating appropriate behavior by example.
C) Specifying the competence levels for every job in an organization and translating
those levels to requisite knowledge and skills.
D) Strengthening internal audit's ability to deter and report improper behavior. -
ANSWER-B) Demonstrating appropriate behavior by example.
An organization's directors, management, and internal auditors all have important roles
in creating a proper control environment. Senior management is primarily responsible
for
A) Implementing and monitoring controls designed by the board of directors.
B) Establishing a proper ethical culture.
C) Designing and operating a control system that provides reasonable assurance that
established objectives and goals will be achieved.
D) Ensuring that external and internal auditors adequately monitor the control
environment. - ANSWER-B) Establishing a proper ethical culture.
According to The IIA Glossary appended to the Standards, which of the following are
most directly designed to ensure that risks are contained?
A) Risk management processes.
, B) Control processes.
C) Governance processes.
D) Internal audit activities. - ANSWER-B) Control processes.
The primary responsibility for establishing and maintaining internal control rests with
A) Management.
B) The controller or the treasurer.
C) The external auditors.
D) The internal auditors. - ANSWER-A) Management.
Which of the following is most likely to be performed in the control activities component
of internal control?
A) Assessing fraud risks.
B) Information processing.
C) Ongoing evaluations.
D) Segregation of duties. - ANSWER-D) Segregation of duties.
Effective internal control
A) Assists with the safeguarding of assets.
B) Is unaffected by changing circumstances and conditions encountered by the
organization.
C) Eliminates risk and potential loss to the organization.
D) Cannot be circumvented by management. - ANSWER-A) Assists with the
safeguarding of assets.
The PCAOB's AS 2201 states that internal controls may be preventive or detective.
Which of the following controls is preventive?
A) Using batch totals.
B) Preparing bank reconciliations.
C) Requiring two persons to open mail.
D) Reconciling the accounts receivable subsidiary file with the control account. -
ANSWER-C) Requiring two persons to open mail.
Which of the following are included in the control environment described in the COSO
internal control framework?
A) Competence of personnel, backup facilities, laws, and regulations.
B) Organizational structure, management philosophy, and planning.
C) Risk assessment, assignment of responsibility, and human resource practices.
D) Integrity and ethical values, assignment of authority, and human resource policies. -
ANSWER-D) Integrity and ethical values, assignment of authority, and human resource
policies.
