CERTIFIED INTERNAL AUDITOR EXAM PRACTICE QUESTIONS AND CORRECT
ANSWERS| A+ GRADED |GUARANTEED PASS!!
1. How are product managers evaluated in a major retailer? - ANSWER They are evaluated on a
combination of sales and gross profit generated from their product lines.
2. What must happen for product managers to purchase beyond their initial budget? - ANSWER Requests
for purchases beyond the initially budgeted amounts must be approved by the marketing manager.
3. What is the purpose of having a purchasing budget set by the marketing manager? - ANSWER It
should provide for the most efficient allocation of scarce organizational resources.
4. What type of control procedure is the purchasing budget approval process considered? - ANSWER It is
considered a detective control procedure.
5. Which control would most likely ensure payroll checks are written only for authorized amounts? -
ANSWER Requiring supervisory approval of employee timecards.
6. What control can prevent the ordering of excess quantities beyond an organization's needs? -
ANSWER Review of all purchase requisitions by a supervisor in the user department before submitting
them to the purchasing department.
7. Which observation by an auditor indicates control weaknesses over safeguarding assets? - ANSWER
Employees hired for sensitive positions are not subjected to background checks.
8. What is a control that could prevent purchasing agents from favoring specific suppliers? - ANSWER
Requiring management's review of a monthly report of the total spent by each buyer.
9. How can defects in finished goods caused by poor quality raw materials be minimized? - ANSWER By
requiring material specifications for all purchases.
,10. What is an appropriate internal control for a multinational corporation's branch office with a
monetary transfer unit? - ANSWER The individual who initiates wire transfers should not reconcile the
bank statement.
11. Which hiring procedure provides the most control over the accuracy of information on an
employment application? - ANSWER The hiring organization calls the last place of employment for each
finalist to verify employment length and position held.
12. What is the significance of a policy requiring review of purchase orders before receiving a new
shipment? - ANSWER It helps prevent ordering quantities in excess of an organization's needs.
13. What is the purpose of establishing a preventive maintenance program for a factory's pretreatment
system? - ANSWER To prevent the release of wastewater that does not meet discharge standards.
14. What is the effect of having a service department location that is not well suited for adequate service
to other units? - ANSWER It indicates the existence of control weaknesses.
15. What should be done to ensure that managers have access to performance reports in relation to
benchmarked organizations? - ANSWER Management should take corrective action to resolve past
engagement observations related to inventory controls.
16. What control can help ensure that payroll checks are distributed correctly? - ANSWER Periodically
witnessing the distribution of payroll checks.
17. What is the importance of conducting periodic floor verification of employees on the payroll? -
ANSWER It helps ensure that payroll checks are written only for authorized amounts.
18. What is a method to ensure pollutants are sufficiently diluted in a factory's wastewater system? -
ANSWER Periodically flushing sinks and floor drains with a large volume of clean water.
19. What is the purpose of requiring agreement of the receiving report and packing slip before storage of
new receipts? - ANSWER To ensure that the quantities received match what was ordered.
, 20. What is the benefit of rotating buyer assignments periodically? - ANSWER It helps prevent purchasing
agents from favoring specific suppliers.
21. What is the role of documented procedures for handling work-in-process inventory? - ANSWER They
help minimize defects in finished goods.
22 What should be done to ensure that foreign currency rates are computed accurately? - ANSWER They
should be computed separately by two different employees.
23.What is a specific objective of an audit of an organization's expenditure cycle? - ANSWER To
determine if all goods paid for have been received and charged to the correct account.
24. Which primary objectives of an audit does the objective of verifying goods received address? -
ANSWER I. Reliability and integrity of financial and operational information; II. Compliance with laws,
regulations, and contracts; IV. Safeguarding of assets.
25. What constitutes 'mandatory guidance' in The IIA's IPPF? - ANSWER II. Code of Ethics; IV. Standards.
26. Which of the following is a Core Principle for the Professional Practice of Internal Auditing? -
ANSWER Is appropriately positioned and adequately resourced.
27. What types of IPPF guidance require public exposure? - ANSWER II. A new standard; III. A new
Supplemental Guide for auditing cybersecurity; IV. A new definition in the IPPF Glossary.
28. What is a part of the Mission of Internal Audit? - ANSWER Protecting organizational value.
29. Which of the following is not a role of the internal audit activity in best practice governance
activities? - ANSWER Ensure the timely implementation of audit recommendations.
30. What is true regarding the internal audit charter? - ANSWER It defines the authorities and
responsibilities for the internal audit activity.
ANSWERS| A+ GRADED |GUARANTEED PASS!!
1. How are product managers evaluated in a major retailer? - ANSWER They are evaluated on a
combination of sales and gross profit generated from their product lines.
2. What must happen for product managers to purchase beyond their initial budget? - ANSWER Requests
for purchases beyond the initially budgeted amounts must be approved by the marketing manager.
3. What is the purpose of having a purchasing budget set by the marketing manager? - ANSWER It
should provide for the most efficient allocation of scarce organizational resources.
4. What type of control procedure is the purchasing budget approval process considered? - ANSWER It is
considered a detective control procedure.
5. Which control would most likely ensure payroll checks are written only for authorized amounts? -
ANSWER Requiring supervisory approval of employee timecards.
6. What control can prevent the ordering of excess quantities beyond an organization's needs? -
ANSWER Review of all purchase requisitions by a supervisor in the user department before submitting
them to the purchasing department.
7. Which observation by an auditor indicates control weaknesses over safeguarding assets? - ANSWER
Employees hired for sensitive positions are not subjected to background checks.
8. What is a control that could prevent purchasing agents from favoring specific suppliers? - ANSWER
Requiring management's review of a monthly report of the total spent by each buyer.
9. How can defects in finished goods caused by poor quality raw materials be minimized? - ANSWER By
requiring material specifications for all purchases.
,10. What is an appropriate internal control for a multinational corporation's branch office with a
monetary transfer unit? - ANSWER The individual who initiates wire transfers should not reconcile the
bank statement.
11. Which hiring procedure provides the most control over the accuracy of information on an
employment application? - ANSWER The hiring organization calls the last place of employment for each
finalist to verify employment length and position held.
12. What is the significance of a policy requiring review of purchase orders before receiving a new
shipment? - ANSWER It helps prevent ordering quantities in excess of an organization's needs.
13. What is the purpose of establishing a preventive maintenance program for a factory's pretreatment
system? - ANSWER To prevent the release of wastewater that does not meet discharge standards.
14. What is the effect of having a service department location that is not well suited for adequate service
to other units? - ANSWER It indicates the existence of control weaknesses.
15. What should be done to ensure that managers have access to performance reports in relation to
benchmarked organizations? - ANSWER Management should take corrective action to resolve past
engagement observations related to inventory controls.
16. What control can help ensure that payroll checks are distributed correctly? - ANSWER Periodically
witnessing the distribution of payroll checks.
17. What is the importance of conducting periodic floor verification of employees on the payroll? -
ANSWER It helps ensure that payroll checks are written only for authorized amounts.
18. What is a method to ensure pollutants are sufficiently diluted in a factory's wastewater system? -
ANSWER Periodically flushing sinks and floor drains with a large volume of clean water.
19. What is the purpose of requiring agreement of the receiving report and packing slip before storage of
new receipts? - ANSWER To ensure that the quantities received match what was ordered.
, 20. What is the benefit of rotating buyer assignments periodically? - ANSWER It helps prevent purchasing
agents from favoring specific suppliers.
21. What is the role of documented procedures for handling work-in-process inventory? - ANSWER They
help minimize defects in finished goods.
22 What should be done to ensure that foreign currency rates are computed accurately? - ANSWER They
should be computed separately by two different employees.
23.What is a specific objective of an audit of an organization's expenditure cycle? - ANSWER To
determine if all goods paid for have been received and charged to the correct account.
24. Which primary objectives of an audit does the objective of verifying goods received address? -
ANSWER I. Reliability and integrity of financial and operational information; II. Compliance with laws,
regulations, and contracts; IV. Safeguarding of assets.
25. What constitutes 'mandatory guidance' in The IIA's IPPF? - ANSWER II. Code of Ethics; IV. Standards.
26. Which of the following is a Core Principle for the Professional Practice of Internal Auditing? -
ANSWER Is appropriately positioned and adequately resourced.
27. What types of IPPF guidance require public exposure? - ANSWER II. A new standard; III. A new
Supplemental Guide for auditing cybersecurity; IV. A new definition in the IPPF Glossary.
28. What is a part of the Mission of Internal Audit? - ANSWER Protecting organizational value.
29. Which of the following is not a role of the internal audit activity in best practice governance
activities? - ANSWER Ensure the timely implementation of audit recommendations.
30. What is true regarding the internal audit charter? - ANSWER It defines the authorities and
responsibilities for the internal audit activity.
