IIA iia-crma practice test

Which of the following actions does not violate the IIA Code of Ethics or Standards?

• A. An internal auditor performing an audit on an operation that they managed less than a year ago.
• B. An internal auditor performing an audit on procedures that they were responsible for creating.
• C. An internal auditor disclosing details of an audit report to colleagues from a different organization.
• D. An internal auditor disclosing confidential information in response to a lawsuit.

Which of the following controls is not appropriate for sales in a manufacturing organization?

• A. Customers' orders are recorded promptly.
• B. Goods shipped are matched with valid customer orders.
• C. Goods returned are inspected for damage by the receiving department for proper disposition.
• D. Sales department approval is required for credit sales transactions.

A manufacturing organization discovers that the waste water released has failed to meet permitted
limits.
Which control function will be least effective in correcting the issue?

• A. Performing a chemical analysis of the water, prior to discharge, for components specified in the permit.
• B. Posting signs that tell employees which substances may be disposed of via sinks and floor drains within the facility.
• C. Diluting pollutants by flushing sinks and floor drains daily with large volumes of clean water.
• D. Establishing a preventive maintenance program for the pretreatment system.

A computer system automatically locks a user's account after three unsuccessful attempts to log on.
Which type of control does this scenario represent?

• A. Corrective control.
• B. Preventive control.
• C. Detective control.
• D. Compensating control.

Why is it important for the chief audit executive to periodically review the audit charter and present
the results to senior management and the board?

• A. Because management requires the review to measure effectiveness of the internal audit activity.
• B. So that the individual objectivity of the internal audit staff can be more clearly established.
• C. So that there is assurance of the internal audit staff's proficiency to complete audit activities.
• D. Because changes in the organization may impair the internal audit activity's ability to meet its objectives.

Which of the following actions indicates a lack of due professional care by an internal auditor
performing an audit of a store's cash function?

• A. The audit report included a well-supported recommendation for a reduction in staff even though such a reduction might adversely impact morale.
• B. The auditor tested samples of transactions to test the cash function's process flows.
• C. After determining that the cash function internal controls were strong, the audit report assured senior management that fraud was not present.
• D. The auditor discovered an instance of potential fraud and reported it immediately to management, but did not alert authorities outside the organization.

During the course of an audit, an internal auditor discovers that a valuable employee in the research
department has been patenting new developments in the employee's name that are unrelated to
the basic business of the organization.
The organization does not have a policy addressing this specific issue, but does have a general policy
that all important new discoveries by employees are the property of the organization.
Division management views the employee's actions as extra incentive to retain the employee.
A decision to include the employee's action in the engagement final communication would be:
1. A violation of the IIA Code of Ethics.
2. A violation of the reporting requirements in the Standards.
3. Justified and necessary, according to the IIA Code of Ethics and Standards.

• A. 1 only
• B. 2 only
• C. 3 only
• D. 1 and 2 only

A staff auditor, nearly finished with an audit engagement, discovers that the director of marketing
has a gambling habit. The gambling issue is not directly related to the existing engagement, and
there is pressure to complete the current engagement. The auditor notes the problem and forwards
the information to the chief audit executive, but performs no further follow-up.
Which of the following statements is true about the auditor's actions?

• A. They are in violation of the IIA Code of Ethics because the auditor withheld meaningful information.
• B. They are in violation of the Standards because the auditor did not properly follow up on a red flag that might indicate the existence of fraud.
• C. They are in violation of neither the IIA Code of Ethics nor the Standards.
• D. They are not in violation of the Standards but are in violation of the IIA Code of Ethics.

Which of the following scenarios would represent the greatest threat to the authority of the internal
audit activity (IAA)?

• A. A change was implemented requiring the IAA to report administratively to the organization's chief legal counsel rather than the board.
• B. Responsibility for risk management processes were removed from the IAA and placed under a newly created chief risk officer.
• C. The IAA was denied access to expenditure and budget requirement reports because the reports were considered to be financial administrative matters.
• D. An internal auditor was informed by the chief financial officer that client survey results would be unfavorable unless the auditor changed a finding in the report.

Which of the following activities best reflects the scope and status of the internal audit activity as
defined in the internal audit policy statement?

• A. The internal auditor reviews the physical access to merchandise during an inventory count.
• B. The audit manager conducts an internal quality assessment of the internal audit activity’s adherence to the Standards.
• C. The audit manager refrains from assigning an auditor who was a former payroll clerk to conduct a payroll audit.
• D. The board approves the annual performance evaluation of the chief audit executive.