IIA-CHAL-QISA IIA Exam Questions and Free Practice Test

Question 25

An internal audit activity maintains a quality assurance and improvement program that includes annual self-assessments The internal audit activity includes in each engagement report a clause that the engagement is conducted in conformance with the International Standards for the Professional Practice of Internal Auditing (Standards). Which of the following justifies inclusion of this clause in the reports?

A. Internal audit activity policies and engagement records provide relevant, sufficient, and competent evidence that the statement is correct.

B. The audit committee has reviewed the annual self-assessment results and approved the use of the clause.

C. The self-assessment results were validated by a qualified external review team three years prior.

D. The internal audit charter, approved by the audit committee, requires conformance withthe Standards

Correct Answer:C
According to the IIA Standards, an internal audit activity must have an external assessment conducted at least once every five years by a qualified, independent reviewer or review team from outside the organization. The validation by an external team ensures that the internal audit activity's self-assessments and quality assurance practices meet the required standards.
: IIA Standard 1312 (External Assessments) and IIA Standard 1320 (Reporting on the
Quality Assurance and Improvement Program) provide detailed guidelines for this process.

Question 26

According to IIA guidance, which of the following activities are typically primary objectives of engagement supervision?

A. Enable training and development of staff, identify engagement objectives, and assign responsibilities to individual auditors.

B. Identify engagement objectives, assign responsibilities to individual auditors, and approve the engagement program.

C. Assign responsibilities to individual auditors, approve the engagement program, and enable training and development of staff.

D. Approve the engagement program, enable training and development of staff, and identify engagement objectives

Correct Answer:C
Engagement Supervision Objectives:
✑ Assign Responsibilities: Supervisors must clearly assign tasks and responsibilities to individual auditors to ensure clarity and accountability during the engagement.
✑ Approve Engagement Program: The supervisor is responsible for reviewing and approving the engagement program, ensuring that it aligns with the engagement objectives and internal audit standards.
✑ Training and Development: Supervision also involves mentoring and developing audit staff, providing guidance and feedback to enhance their skills and performance.
IIA Standards:
✑ Standard 2340 – Engagement Supervision: Internal audit engagements must be properly supervised to ensure objectives are achieved, quality is maintained, and staff are developed.
Primary Objectives:
✑ Clarity and Accountability: Assigning responsibilities ensures that each auditor
knows their role and tasks.
✑ Quality and Compliance: Approving the engagement program ensures that the audit plan is robust and compliant with standards.
✑ Professional Development: Enabling training and development helps build a competent and skilled audit team.
References:
✑ Effective engagement supervision involves assigning responsibilities, approving the engagement program, and facilitating training and development, ensuring a successful audit engagement and continuous staff improvement.

Question 27

According to IIA guidance, which of the following statements is true regarding engagement planning?

A. For both assurance and consulting engagements, planning typically occurs after the engagement objectives and scope have already been determined.

B. The expectations and objectives of an assurance engagement are usually determined b

C. or in conjunction with, the engagement client

D. Internal auditors may not need to complete a preliminary risk assessment for a consulting engagement as they would when planning an assurance engagement.

E. For both consulting and assurance engagements, internal auditors usually form the engagement objectives prior to completing the preliminary risk assessment

Correct Answer:B
The expectations and objectives of an assurance engagement are often determined in conjunction with the engagement client, aligning with the client's needs and the scope of the engagement. In consulting engagements, internal auditors provide advice and services
tailored to the client's requests, which may not always follow a preliminary risk assessment process like in assurance engagements.
: The IIA??s International Standards for the Professional Practice of Internal Auditing
(Standards) provide detailed guidance on this aspect of engagement planning, particularly in Standards 2200 and 2201.

Question 28

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

A. Internal assessments provide sufficient objectivity to provide evidence to the board that the internal audit activity understands the organization's control processes.

B. Quality assessments focus on the internal audit activity??s structure, relationships withstakeholders, compliance with the Standards, and internal audit staff proficiency.

C. 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

D. Internal auditors completing internal assessments must demonstrate certification to perform quality assessments

Correct Answer:B
✑ 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 .

Question 29

A company makes a product at a cost of $26 per unit, of which $10 is fixed cost. The product is usually sold for $30 per unit; however, the company has been approached by a new customer who would like to purchase 3,500 units for $18 each Further, the company would Incur additional cost to deliver the units to this customer If the company has the excess manufacturing capacity and all other factors are constant, what is the additional cost that the company would Incur in order to makea profit of $1.50 per unit for this order?

A. $0.50

B. $1.50

C. $2 50

D. $3.50

Correct Answer:C
To determine the additional cost that the company would incur to make a profit of $1.50 per unit for the new order, we need to calculate the relevant costs and desired profit margin:
✑ Current Cost and Selling Price: The current cost to produce one unit is $26, with $10 being fixed costs and $16 being variable costs. The product is usually sold for $30.
✑ New Order Pricing: The new customer offers to purchase 3,500 units at $18 each.
The company needs to make a profit of $1.50 per unit on this order.
✑ Calculation:
The additional cost that can be incurred while still making a profit of $1.50 per unit is $2.50

Question 30

Management would like to self-assess the overall effectiveness of the controls in place for its 200-person manufacturing department Which of the following client-facilitated approaches is likely to be the most efficient way to accomplish this objective?

A. Workshops.

B. Surveys.

C. Interviews.

D. Observation.

Correct Answer:B
Self-assessment of controls can be efficiently conducted using various client-facilitated approaches. The choice of method depends on factors such as the size of the department, the nature of the controls, and the need for comprehensive feedback.
✑ Efficiency in Large Groups:Surveys are particularly effective for large groups (such
as a 200-person department) as they allow for the collection of data from many individuals quickly and efficiently.
Reference:IIA Practice Guide on "Control Self-Assessment," which suggests using surveys for broad-based data collection when assessing control effectiveness across larger groups.
Standardized Feedback:Surveys provide standardized questions, ensuring consistent data collection and making it easier to analyze the responses.
Practical Example:A survey might include questions rating the effectiveness of different control measures on a scale, allowing management to identify areas of strength and weakness.
Anonymity and Honest Responses:Surveys can be conducted anonymously, encouraging more honest and candid feedback from employees who might hesitate to speak openly in workshops or interviews.
Advantage:This anonymity can lead to more accurate assessments of the controls'
effectiveness, as employees might feel more comfortable pointing out issues without fear of repercussions.
Comparison to Other Methods:
Workshops (A):While useful for in-depth discussions, they are time-consuming and less efficient for large groups.
Interviews (C):Provide detailed insights but are also time-consuming and not practical for a 200-person department.
Observation (D):Useful for firsthand assessment but not efficient for gathering widespread feedback across a large department.
Conclusion:The correct answer is B, as surveys are the most efficient method for self- assessing the overall effectiveness of controls in a large department, offering a balance of broad coverage, standardized data, and anonymity.

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