IIA-CHAL-QISA Dumps 2024 - New IIA IIA-CHAL-QISA Exam Questions

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NEW QUESTION # 12
Which of the following processes does the board manage to ensure adequate governance?

• A. Establish and measure performance objectives for the internal audit activity
• B. Develop strategies to mitigate the risks to achieving the organization's objectives
• C. Develop, approve, and execute the strategic plan of the organization
• D. Select board members with necessary knowledge and skills.

Answer: C

Explanation:
The board manages several key processes to ensure adequate governance within an organization, one of which is the development, approval, and execution of the strategic plan. This process is critical because it defines the organization's direction, goals, and the actions required to achieve these goals.
* Strategic Planning: The board plays a pivotal role in setting the organization's strategic direction, which includes establishing long-term goals and defining the means to achieve them.
* Performance Measurement: While the board may establish and measure performance objectives for the internal audit activity, this is part of a broader governance framework.
* Risk Management: The board also develops strategies to mitigate risks, ensuring that the organization
* can achieve its objectives effectively.
Thus, the most comprehensive governance-related process managed by the board involves strategic planning

NEW QUESTION # 13
A newly appointed chief audit executive (CAE) started analyzing the organization's policies in an attempt to customize them to address internal audit specifics. Which of the following organizationwide practices is most likely to be acceptable to the CAE?

• A. Hiring practices include requiring potential auditors to disclose any significant stock ownership in the organization.
• B. Standard training for each employee, including internal auditors, is 10 hours per year.
• C. To enhance efficiency, Internal auditors should not be rotated regularly among engagements
• D. Internal auditors' performance evaluation is primarily based on both client satisfaction surveys and cost savings identified from the audits

Answer: D

Explanation:
The statistical model indicates that daily sales have a direct relationship with the cost of ingredients used and an inverse relationship with rainy days.
* Option A: On a rainy day, if total sales are greater than expected compared to the cost of ingredients used, it may indicate discrepancies that could be a sign of employee theft. For instance, if ingredients are used but not reflected in the sales, it suggests that items might be missing (stolen).
* Option B: On a sunny day, lower-than-expected sales compared to the cost of ingredients could indicate wastage but not necessarily theft.
* Option C and D: Both scenarios where total sales and the cost of ingredients are higher or lower than expected do not specifically point to theft without additional context.

NEW QUESTION # 14
According to Maslow's hierarchy of needs theory, which of the following best describes a strategy where a manager offers an assignment to a subordinate specifically to support his professional growth and future advancement^

• A. Sense of belonging in the organization
• B. Job security.
• C. Esteem by colleagues.
• D. Self-fulfillment.

Answer: D

Explanation:
According to Maslow's hierarchy of needs theory, self-fulfillment or self-actualization represents the highest level of human motivation, where an individual seeks to achieve personal growth, professional development, and realization of their potential. Offering an assignment to a subordinate to support their professional growth and future advancement aligns with this concept, as it helps the individual achieve a sense of self-fulfillment.

NEW QUESTION # 15
If the skills and competencies are not present within the internal audit activity to complete an ad-hoc assurance engagement, which of the following is an acceptable resolution?

• A. Politely decline the engagement due to a lack of qualified staff available at the time.
• B. Change the scope of the testing to ensure that only available staff proficiencies are used
• C. Consider using employees from other departments in the organization on the audit team.
• D. Complete the engagement as requested, with the best of the current staff's abilities.

Answer: C

Explanation:
* Introduction:
* When the internal audit team lacks necessary skills for an ad-hoc assurance engagement, leveraging internal resources can be a practical solution.
* Resolving Skill Gaps:
* Using employees from other departments can provide the needed expertise while maintaining the engagement's integrity.
* Options Analysis:
* Option A: Declining the engagement may not be feasible and does not address the need.
* Option B: Completing the engagement without the required skills can compromise quality.
* Option C: Using employees from other departments brings in the necessary competencies and supports cross-functional collaboration.
* Option D: Changing the scope may limit the effectiveness of the engagement.
* Conclusion:
* The acceptable resolution is to consider using employees from other departments in the organization to bring in the required skills for the engagement.

NEW QUESTION # 16
Which of the following best describes the internal audit activity's responsibility within a risk and control framework?

• A. The internal audit activity provides direction regarding internal controls implementation.
• B. The internal audit activity implements the internal control framework and advises management regarding best practices
• C. The internal audit activity constitutes the first line of defense in effective risk management.
• D. The internal audit activity verifies that management has met its responsibility for implementing effective controls.

Answer: D

Explanation:
* Introduction:
* The role of the internal audit activity within a risk and control framework is to provide independent assurance that management has established and is maintaining effective internal controls.
* Responsibilities of Internal Audit:
* Internal auditors evaluate and monitor the effectiveness of internal controls, ensuring they are designed and operating effectively to mitigate risks and achieve organizational objectives.
* Options Analysis:
* Option A: Internal audit does not constitute the first line of defense; this role is typically held by
* management.
* Option B: While internal audit may provide recommendations, it does not direct the implementation of internal controls.
* Option C: Verifying that management has met its responsibility for implementing effective controls aligns with the assurance role of internal audit.
* Option D: Implementing the internal control framework is a management responsibility, not internal audit's.
* Conclusion:
* The best description of internal audit's responsibility within a risk and control framework is to verify that management has met its responsibility for implementing effective controls.

NEW QUESTION # 17
According to ISO 31000, which of the following statements is correct?

• A. The framework is designed to be effective for organizations no matter how small.
• B. The internal audit activity will provide assurance over operating effectiveness but not over the design of risk management activities
• C. The board is responsible for setting the organizational attitude through tone at the top.
• D. The internal audit activity can give objective assurance on any part of the risk management framework for which it is responsible.

Answer: A

Explanation:
According to ISO 31000, the risk management framework is scalable and applicable to organizations of all sizes, including small entities. The framework's principles are designed to be flexible and adaptable, ensuring they can be effectively implemented regardless of the organization's size.
* Scalability: The principles and guidelines of ISO 31000 can be tailored to fit the specific context, resources, and complexity of any organization, making it a universal standard.
* Flexibility: The framework supports organizations in integrating risk management practices into their operations at a level that suits their size and complexity.
* Effectiveness: Regardless of the organization's size, the framework aims to enhance risk management practices and support better decision-making.
References:
* "ISO 31000: Risk Management Guidelines," which outlines the applicability and flexibility of the framework for all organizations .

NEW QUESTION # 18
A newly appointed chief audit executive (CAE) of a small organization is developing a resource management plan. Which of the following approaches would be most beneficial to help the CAE obtain details of the internal audit activity's collective knowledge, skills, and other competencies?

• A. Obtain from the human resources department the job descriptions and position requirements forall internal audit staff.
• B. Request the internal audit staff to submit a document that summarizes their most recent performance appraisals and post audit reviews.
• C. Review or establish a documented skills assessment of the internal audit staff and gather information from post-audit surveys.
• D. Conduct an objective written test of the internal audit staff to assess their knowledge and skills related to core internal audit competencies.

Answer: C

Explanation:
Conducting a documented skills assessment helps in identifying the existing competencies and any gaps within the internal audit team.
Post-audit surveys can provide feedback on the performance and areas for improvement, which can be used to further refine the skills and competencies of the audit staff (Ref: [16†source])

NEW QUESTION # 19
Which of the following is the most appropriate way to ensure that a newly formed internal audit activity remains free from undue influence by management?

• A. Ensure the chief audit executive reports administratively to the audit committee.
• B. Establish the internal audit activity's position within the organization in an audit charter
• C. Appoint the chief audit executive as a member of the board.
• D. Adopt written policies and procedures for the internal audit activity, approved by the board.

Answer: B

Explanation:
The internal audit charter is a formal document that defines the internal audit activity's purpose, authority, and responsibility.
Establishing the internal audit activity's position within the organization in an audit charter ensures independence and objectivity by clearly stating the internal audit's role and its reporting lines.
The charter should be approved by the board and senior management to reinforce its authority and protect the internal audit activity from undue influence by management

NEW QUESTION # 20
Which of the following best describes the guideline for preparing audit engagement workpapers?

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

Answer: C

Explanation:
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.
* While workpapers must indeed be clear to the auditor in charge and the chief audit executive, this guideline does not fully capture the broader requirement for understandability to other auditors.
* Option B: Workpapers should be understandable to the audit client and the board.
* Although transparency with the audit client and the board is important, workpapers are primarily internal documents used to support the audit process and conclusions.
* Option C: Workpapers should be understandable to another internal auditor who was not involved in the engagement.
* This is the most comprehensive requirement, ensuring that any internal auditor, even if not originally involved, can review the workpapers, understand the procedures performed, and the conclusions reached. This is crucial for maintaining continuity, quality control, and facilitating reviews or future audits.
* Option D: Workpapers should be understandable to external auditors and regulatory agencies.
* While external auditors and regulatory agencies may review workpapers, the primary audience is internal auditors, who need to ensure the workpapers are detailed and clear enough for effective internal use and review.

NEW QUESTION # 21
An investor has acquired an organization that has a dominant position in a mature, slow-growth industry and consistently creates positive financial income Which of the following terms would the investor most likely label this investment in her portfolio?

• A. A star.
• B. A dog
• C. A question mark.
• D. A cash cow.

Answer: D

Explanation:
Investment Portfolio Terms:
* Cash Cow: A business unit with a dominant market position in a mature, slow-growth industry that generates consistent positive cash flow and profits. It requires little investment to maintain its market position and provides funds for other investments.
* Star: A business unit with a high market share in a fast-growing industry. It requires significant investment to maintain its position and support further growth.
* Question Mark: A business unit with a low market share in a high-growth industry. It requires substantial investment to increase market share.
* Dog: A business unit with a low market share in a slow-growth industry, generating minimal profit or loss.
Characteristics of a Cash Cow:
* Dominant Position: The acquired organization has a strong market position.
* Mature Industry: The industry is mature with slow growth.
* Positive Financial Income: Consistently generates positive cash flow and profits, requiring minimal investment.
Investment Strategy:
* Portfolio Management: Investors typically use cash cows to fund other investments, maintaining a balanced portfolio that supports growth while providing stable returns.
References:
* The term "cash cow" accurately describes an organization with a dominant position in a mature, slow-growth industry that consistently generates positive financial income, fitting the investor's description.

NEW QUESTION # 22
Which of the following is an advantage of utilizing an external fraud specialist in a suspected fraud investigation?

• A. Increased ability to preserve evidence and the chain of command.
• B. increased access to the organization's software and proprietary data.
• C. increased access to the organization's employees.
• D. Increased ability to scrutinize the organization's key business processes.

Answer: A

Explanation:
* Introduction:
* Engaging an external fraud specialist brings several advantages to an investigation, particularly in preserving the integrity of evidence.
* Advantages of External Fraud Specialists:
* External specialists bring expertise, objectivity, and resources that may not be available internally.
* Options Analysis:
* Option A: Access to employees is not necessarily increased with external specialists.
* Option B: External fraud specialists have the skills and protocols to preserve evidence and maintain the chain of command, ensuring legal and procedural compliance.
* Option C: Scrutinizing business processes is part of their role, but the primary advantage lies in evidence preservation.
* Option D: Access to software and proprietary data is not the primary advantage; internal controls can provide this access as needed.
* Conclusion:
* The main advantage of utilizing an external fraud specialist is their increased ability to preserve evidence and maintain the chain of command, which is critical in legal and compliance contexts.

NEW QUESTION # 23
A multinational organization has multiple divisions that sell their products internally to other divisions When selling internally, which of the following transfer prices would lead to the best decisions for the organization?

• A. Variable cost plus a markup.
• B. Full cost
• C. Full cost plus a markup.
• D. Market price of the product.

Answer: D

Explanation:
Using the market price of the product for internal transfer pricing leads to the best decisions for the organization because it reflects the true economic value of the goods or services being transferred. This method promotes efficiency and fairness within the divisions.
* Economic Value: Market price reflects the true economic value, ensuring that the internal transactions are conducted at fair and competitive prices.
* Performance Measurement: It provides a consistent basis for evaluating the performance of different divisions, as they are measured against external market conditions.
* Resource Allocation: Helps in optimal allocation of resources by ensuring that internal transactions are economically justified and comparable to external transactions.
References:
* "Management Accounting: Principles and Practices," which discusses the advantages of using market-based transfer pricing .

NEW QUESTION # 24
Which of the following documents are internal auditors most likely to be asked to sign as a demonstration of due professional care?

• A. A non-disclosure agreement
• B. The internal audit charter
• C. An annual declaration of commitment to The HAs Code of Ethics.
• D. A description of their job responsibilities.

Answer: C

Explanation:
* Professional Responsibility:Internal auditors are expected to demonstrate their commitment to professional standards and ethics.
* Code of Ethics:The IIA's Code of Ethics outlines principles that internal auditors must follow, including integrity, objectivity, confidentiality, and competency.
* Annual Declaration:Signing an annual declaration reinforces the auditor's commitment to these principles and ensures ongoing adherence to the professional standards.
* Demonstration of Due Care:By signing this declaration, auditors formally acknowledge their responsibility to uphold ethical standards, which is a demonstration of due professional care.
References:
* The IIA's Code of Ethics.
* The IIA's International Standards for the Professional Practice of Internal Auditing.

NEW QUESTION # 25
Which of the following statements is true regarding partnership liquidation?

• A. Partnership liquidation occurs when there is capital deficiency.
• B. When a partnership Is liquidated, each partner pays creditors from cash received
• C. Partnership liquidation ends both the legal and economic life of an entity
• D. Operations can continue after the liquidation, if all partners agree.

Answer: C

Explanation:
Partnership liquidation refers to the process of dissolving a partnership, where all assets are sold, liabilities are paid off, and any remaining assets are distributed among the partners. This process marks the end of the partnership's legal existence and its economic activities.
* Legal and Economic Termination: Upon liquidation, the partnership ceases to exist legally and economically. This means that it can no longer operate or enter into new business transactions.
* Asset Distribution: The liquidation process ensures that all assets are sold, and the proceeds are used to pay off any outstanding debts. Any remaining funds are distributed to the partners according to the partnership agreement.
* Capital Deficiency: While capital deficiency might prompt liquidation, it is not a defining characteristic of the process.
* Creditors Payment: Creditors are paid from the partnership's assets, not directly by the partners unless agreed otherwise or if the assets are insufficient to cover the liabilities.
References:
* "Fundamentals of Partnership Accounting," which details the steps and consequences of partnership liquidation.

NEW QUESTION # 26
Which of the following is the next step in understanding a business process once an internal auditor has identified the process?

• A. Determine process activities.
• B. Determine process outputs
• C. Determine process goals
• D. Determine process inputs.

Answer: A

Explanation:
Once an internal auditor has identified a business process, the next step is to understand the specific activities involved in that process. This includes mapping out each step or action taken within the process to gain a detailed understanding of how it operates. Identifying process activities helps in evaluating the efficiency, effectiveness, and potential risks associated with the process

NEW QUESTION # 27
Which of the following statements is most accurate with respect to the required elements of the quality assurance and improvement program?

• A. Quality assessments focus on the internal audit activity's structure, relationships withstakeholders, compliance with the Standards, and internal audit staff proficiency.
• B. Internal assessments provide sufficient objectivity to provide evidence to the board that the internal audit activity understands the organization's control processes.
• C. Internal auditors completing internal assessments must demonstrate certification to perform quality assessments
• D. in order to comply with the Standards, the internal audit activity must obtain an objective assessment of its processes and function at least once a year

Answer: A

Explanation:
* Understanding Quality Assessments:Quality assessments in internal audit activities are designed to evaluate various aspects such as the structure of the internal audit activity, relationships with stakeholders, compliance with the IIA Standards, and the proficiency of internal audit staff.
* Internal Assessments:These include ongoing monitoring of the performance of the internal audit activity and periodic self-assessments or assessments by other persons within the organization with sufficient knowledge of internal audit practices.
* External Assessments:External assessments should be conducted at least once every five years by a qualified, independent assessor or assessment team from outside the organization to ensure objectivity and comprehensiveness.
* Focus Areas:Quality assessments should focus on compliance with the IIA Standards, the effectiveness of the internal audit activity's structure, the quality of relationships with stakeholders, and the proficiency and continuous professional development of internal audit staff.
* Continuous Improvement:The quality assurance and improvement program (QAIP) should be designed to enable the internal audit activity to add value and improve an organization's operations. It helps ensure that the internal audit activity is in compliance with the IIA Standards and Code of Ethics and continuously improves.
References:
* IIA Standard 1300 - Quality Assurance and Improvement Program .

NEW QUESTION # 28
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