2025 IIA PRACTICE TEST - PART 1
QUESTIONS WITH 100% CORRECT
ANSWERS!!
1 of 48
Term
Question: The vice president of finance for a regional bank is
contacted by a small broker-dealer with a request for the bank's
internal audit activity to provide assurance services performed by
the bank's internal audit staff. The bank's internal audit charter neither
authorizes nor forbids the internal audit activity to perform
assurances for outside parties. Which of the following conditions
apply to providing the requested service?
a. Providing assurances to outside parties is a violation of
the Standards.
b.The vice president of finance needs approval of the chief financial
,officer or the audit committee before authorizing the chief audit
executive to schedule the engagement without amending the
charter.
c.The charter should be amended to allow the internal audit
activity to provide assurance services to outside parties.
d.The vice president of finance may authorize the chief
audit executive to schedule the e
Give this one a try later!
Answer: c. The charter should be amended to allow the internal audit
activity to provide assurance services to outside parties.
Rationale: According to the Standards, an internal audit activity may
provide assurance services to outside parties only if the nature of these
services is defined in the audit charter (Implementation Standard 1000.A1). In
this case, since the bank's internal audit charter neither authorizes nor
forbids the internal audit activity to perform assurances for outside
parties, the appropriate condition is that the charter should be
amended to allow the internal audit activity to provide assurance
services to outside parties. This ensures that the provision of such
services is in alignment with the
Standards and properly authorized by the charter.
Chief audit executive (CAE) -
Typically, those individuals conducting ongoing and periodic reviews should
report to the CAE while performing the reviews and should communicate their
results directly to the CAE.
Answer: b. Innovation, fairness, and collaboration.
Rationale: The King Report on Corporate Governance emphasizes effective
leadership based on an ethical foundation and the need to fundamentally
redesign the organization around sustainability. The key tools described for
achieving sustainability in this context are innovation, fairness, and collaboration.
These tools align with the principles of the King Report. The other answer
choices are related to different control or risk management models and are not
specific to the concept of redesigning an organization around sustainability.
, Communicate the reasoning behind the control objectives to employees. -
Objectives and reasons for controls need to be communicated to employees. If
this is not done, employees may see controls as unnecessary, irrelevant, and a
waste of time. The other answer choices would be less effective or efficient.
Don't know?
2 of 48
Term
Question: In the final report for an internal audit, the internal auditor
states that security controls are at the same level of effectiveness as
in the previous audit. There is no mention that control activities in the
previous audit were found to be unsatisfactory. According to the
Code of Ethics, this communication is
Answer Choices:
a. potentially biased.
b. specific but unethical.
c. prudent and competent.
d. balanced and objective.
Give this one a try later!
Correct Answer: d. A strong organizational culture.
Rationale: With a strong culture, the organization's key values are intensely held
and widely shared. Substantial extra training has been expended to achieve this
high degree of acceptance, making the need for formal, written policies
minimal. Therefore, a strong organizational culture minimizes the need for
written policies in certain conditions.
, Correct Answer: a. Identify inadequate controls that increase the likelihood of
unauthorized expenditures.
Rationale: The primary function of internal auditing regarding internal financial
reports is to identify inadequate controls that may lead to unauthorized
expenditures. Internal auditors focus on assessing and improving controls to
mitigate risks related to financial processes.
Correct Answer: a. potentially biased.
Rationale: Rule 2.3 in the Code of Ethics indicates that all information
necessary for the user to correctly understand the audit report must be
disclosed. In this case, omitting information about unsatisfactory control
activities in the previous audit may create a potentially biased view of the
current state of security controls.
Correct Answer: d. Line managers are instructed to review and amend
processes to align them with the organization's CSR policy.
Rationale: Mere adoption of a CSR framework is not sufficient; an organization's
processes must be integrated into the framework. Results should be reported
both within and outside the organization to meet the needs of various
stakeholders, including regulatory groups. Line managers reviewing and
amending processes to align with the organization's CSR policy demonstrates a
commitment to CSR at the operational level.
Don't know?
3 of 48
Term
Question: An organization is changing to a system that
incorporates quality throughout the process, which is very different
from its years of dependence on quality control at the end of
the process. What type of change is this?
a.Cultural change.
b. Organizational change.
QUESTIONS WITH 100% CORRECT
ANSWERS!!
1 of 48
Term
Question: The vice president of finance for a regional bank is
contacted by a small broker-dealer with a request for the bank's
internal audit activity to provide assurance services performed by
the bank's internal audit staff. The bank's internal audit charter neither
authorizes nor forbids the internal audit activity to perform
assurances for outside parties. Which of the following conditions
apply to providing the requested service?
a. Providing assurances to outside parties is a violation of
the Standards.
b.The vice president of finance needs approval of the chief financial
,officer or the audit committee before authorizing the chief audit
executive to schedule the engagement without amending the
charter.
c.The charter should be amended to allow the internal audit
activity to provide assurance services to outside parties.
d.The vice president of finance may authorize the chief
audit executive to schedule the e
Give this one a try later!
Answer: c. The charter should be amended to allow the internal audit
activity to provide assurance services to outside parties.
Rationale: According to the Standards, an internal audit activity may
provide assurance services to outside parties only if the nature of these
services is defined in the audit charter (Implementation Standard 1000.A1). In
this case, since the bank's internal audit charter neither authorizes nor
forbids the internal audit activity to perform assurances for outside
parties, the appropriate condition is that the charter should be
amended to allow the internal audit activity to provide assurance
services to outside parties. This ensures that the provision of such
services is in alignment with the
Standards and properly authorized by the charter.
Chief audit executive (CAE) -
Typically, those individuals conducting ongoing and periodic reviews should
report to the CAE while performing the reviews and should communicate their
results directly to the CAE.
Answer: b. Innovation, fairness, and collaboration.
Rationale: The King Report on Corporate Governance emphasizes effective
leadership based on an ethical foundation and the need to fundamentally
redesign the organization around sustainability. The key tools described for
achieving sustainability in this context are innovation, fairness, and collaboration.
These tools align with the principles of the King Report. The other answer
choices are related to different control or risk management models and are not
specific to the concept of redesigning an organization around sustainability.
, Communicate the reasoning behind the control objectives to employees. -
Objectives and reasons for controls need to be communicated to employees. If
this is not done, employees may see controls as unnecessary, irrelevant, and a
waste of time. The other answer choices would be less effective or efficient.
Don't know?
2 of 48
Term
Question: In the final report for an internal audit, the internal auditor
states that security controls are at the same level of effectiveness as
in the previous audit. There is no mention that control activities in the
previous audit were found to be unsatisfactory. According to the
Code of Ethics, this communication is
Answer Choices:
a. potentially biased.
b. specific but unethical.
c. prudent and competent.
d. balanced and objective.
Give this one a try later!
Correct Answer: d. A strong organizational culture.
Rationale: With a strong culture, the organization's key values are intensely held
and widely shared. Substantial extra training has been expended to achieve this
high degree of acceptance, making the need for formal, written policies
minimal. Therefore, a strong organizational culture minimizes the need for
written policies in certain conditions.
, Correct Answer: a. Identify inadequate controls that increase the likelihood of
unauthorized expenditures.
Rationale: The primary function of internal auditing regarding internal financial
reports is to identify inadequate controls that may lead to unauthorized
expenditures. Internal auditors focus on assessing and improving controls to
mitigate risks related to financial processes.
Correct Answer: a. potentially biased.
Rationale: Rule 2.3 in the Code of Ethics indicates that all information
necessary for the user to correctly understand the audit report must be
disclosed. In this case, omitting information about unsatisfactory control
activities in the previous audit may create a potentially biased view of the
current state of security controls.
Correct Answer: d. Line managers are instructed to review and amend
processes to align them with the organization's CSR policy.
Rationale: Mere adoption of a CSR framework is not sufficient; an organization's
processes must be integrated into the framework. Results should be reported
both within and outside the organization to meet the needs of various
stakeholders, including regulatory groups. Line managers reviewing and
amending processes to align with the organization's CSR policy demonstrates a
commitment to CSR at the operational level.
Don't know?
3 of 48
Term
Question: An organization is changing to a system that
incorporates quality throughout the process, which is very different
from its years of dependence on quality control at the end of
the process. What type of change is this?
a.Cultural change.
b. Organizational change.
