Verified & Correct IIA-CRMA Practice Test Reliable Source Aug 09, 2023 Updated [Q123-Q146]

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Verified & Correct IIA-CRMA Practice Test Reliable Source Aug 09, 2023 Updated

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QUESTION 123
According to IIA guidance, which of the following are considerations of due professional care when an internal auditor conducts a formal consulting engagement?
1. The complexity of the work required.
2. The needs and expectations of the client.
3. The potential value of the engagement compared to the effort.
4. Information regarding assumptions and procedures to be employed.

1 and 4 only

2 and 3 only

1, 2, and 3 only

1, 2, 3, and 4

QUESTION 124
According to the COSO enterprise risk management (ERM) framework, which of the following is not part of the new paradigm in ERM?

Assessing the risk factors.

Aligning risk appetite and strategy.

Enhancing risk response decisions.

Reducing operational surprises and losses.

QUESTION 125
What is the primary purpose of a fishbone diagram?

To depict the areas of responsibility for departments in an organization.

To plan and control complex projects, such as internal audits.

To represent the frequencies of adverse conditions in a given process.

To identify the possible causes of adverse conditions.

QUESTION 126
An internal audit activity includes in its audit reports the assertion that its work is performed in conformance with the International Standards for the Professional Practice of Internal Auditing {Standards). A recent external quality assessment concluded that the internal audit activity had substantial deficiencies that impact its overall operations. According to IIA guidance, which of the following is the most appropriate action for issuing future audit reports?

Refrain from indicating that the internal audit activity operates in conformance with the Standards until the chief audit executive confirms that the internal audit activity has addressed all areas of nonconformance and the audit committee has been notified.

Refrain from indicating that the internal audit activity operates in conformance with the Standards until another external assessment confirms that the significant areas of nonconformance have been addressed.

Indicate that the internal audit activity operates in partial conformance with the Standards, as the internal audit activity has a quality assurance and improvement program in place to address deficiencies and has met the requirement for conducting an external assessment.

Update and reissue previous audit reports, removing the assertion that the internal audit activity operates in conformance with the Standards, and distribute them to all parties who received the original reports.

QUESTION 127
Internal auditors must exercise due professional care by considering which of the following?
1. Cost of assurance in relation to potential benefits.
2. Adequacy and effectiveness of governance, risk management, and control processes.
3. Management’s competency level in the area being evaluated.
4. Probability of significant errors, fraud, or noncompliance.

1 and 2 only

1, 2, and 3 only

1, 2, and 4 only

2, 3, and 4 only

QUESTION 128
Evidence discovered during the course of an engagement suggests that multiple incidents of fraud have occurred. There do not appear to be sufficient controls in place to prevent reoccurrence. Which of the following is the internal auditor’s most appropriate next step?

Immediately notify management of the area under review and the other internal auditors involved in the engagement.

Discuss the situation with the engagement supervisor to determine whether fraud investigation experts are required to investigate the matter properly.

Fully document in the workpapers the evidence that has been discovered and recommend appropriate controls to address the fraud.

Provide the evidence that was discovered to local law enforcement for possible prosecution of the suspected fraud.

QUESTION 129
Which of the following is the most common way that occupational fraud is detected?

Internal audits.

Whistleblower hotline.

Key controls.

External audits.

QUESTION 130
An internal auditor is using a spreadsheet application to review a cash flow forecast prepared by management.
Which of the following correctly identifies the type of evidence this information represents?

Competent, corroborative evidence of future working capital requirements.

Sufficient, analytical evidence of the cash flow position at a given point of time in the future.

Competent, documentary evidence of future cash flow changes within the organization.

Sufficient, circumstantial evidence of the future solvency of the organization.

QUESTION 131
According to the Standards, for how long should internal auditors who have previously performed or had management responsibility for an operation wait to become involved in future internal audit activity with that same operation?

Three months.

Six months.

One year.

Two years.

QUESTION 132
According to the Standards, which of the following is not a consideration when exercising due professional care for an assurance engagement?

The relative complexity, materiality, or significance of matters to which assurance procedures are applied.

The extent of assurance services necessary to ensure that all risks are identified.

The cost of providing the assurance services in relation to potential benefits.

The probability of significant errors, irregularities or instances of noncompliance.

QUESTION 133
Given the highly technical and legal nature of privacy issues, which of the following statements best describes the internal audit activity’s responsibility with regard to assessing an organization’s privacy framework?

If an organization does not have a mature privacy framework, the internal audit activity should assist in developing and implementing an appropriate privacy framework.

Because the audit committee is ultimately responsible for ensuring that appropriate control processes are in place to mitigate risks associated with personal information, the internal audit activity is C. required to conduct privacy assessments.

The internal audit activity may delegate to nonaudit IT specialists the responsibility of determining whether personal information has been secured adequately and data protection controls are sufficient.

The internal audit activity should have appropriate knowledge and competence to conduct an asses …….framework.

QUESTION 134
An auditor identifies three errors in the sample of 25 entries selected for review (a 12 percent error rate).
Based on this result, the auditor assumes that approximately 59 of the total population of 492 entries are incorrect. To reach this assumption, the auditor has used a technique known as which of the following?

Variability tolerance.

Ratio estimation.

Stratification.

Acceptance sampling.

QUESTION 135
According to COSO, which of the following describes a principle related to the control environment?

The organization identifies and assesses changes that could significantly impact the system of internal control.

The organization establishes appropriate authorities and responsibilities in the pursuit of objectives.

The organization selects and develops control activities that contribute to the mitigation of risks.

The organization performs evaluations to ascertain whether internal control components are present and functioning.

QUESTION 136
Which of the following combinations of conditions is most likely a red flag for fraud?

The practice of surprise audits and the implementation of an employee support program.

Hiring an employee with a prior fraud conviction and yearly management review.

Occasional accounting department overrides and discontinuation of the anonymous fraud hotline due to infrequent use.

A veteran employee in upper management experiencing financial difficulties and recently implemented enhanced controls.

QUESTION 137
A fraud investigation was completed by management, and a proven fraud was communicated to relevant authorities. According to MA guidance, which of the following roles would be most appropriate for the internal audit activity to undertake after the investigation?

Plan employee sessions and team building strategies for the organization to improve awareness of fraud among employees.

Review the investigation and implement any improvements to the process.

Conduct lessons learned sessions to ascertain how the fraud occurred and which controls failed.

Determine why The fraud was not detected earlier and design controls to strengthen early detection.

QUESTION 138
Which of the following activities should the chief audit executive perform to ensure compliance with an organization’s code of conduct?

Act as an adviser to the committee responsible for reviewing violations of the code.

Review and adjudicate all violations of the code of conduct.

Lead the committee responsible for the oversight of the code.

Implement a system of procedures to inform all employees of the code.

QUESTION 139
According to the IIA guidance, who is responsible for periodically assessing the internal audit activity?

The board.

The chief audit executive.

Senior management.

The external auditors.

QUESTION 140
According to The IIA’s Code of Ethics, which of the following is true?

Confidentiality requires that auditors disclose all material facts known to them.

Integrity requires that auditors perform internal audit services in accordance with the Standards.

Objectivity requires that auditors perform their work with honesty, diligence, and responsibility.

Confidentiality requires that auditors be prudent in the use and protection of client information.

QUESTION 141
While reviewing the workpapers of a new auditor, the auditor in charge discovered that additional audit procedures might be necessary. According to IIA guidance, which of the following would be most relevant for the auditor in charge to consider when making this decision?

Resource management.

Coordination.

Due professional care.

Engagement supervision.

QUESTION 142
Which of the following best describes the misdirection of payments on accounts receivable to an employee’s bank account?

Fraud open on the books.

Fraud hidden on the books.

Fraud off the books.

Fraud on the balance sheet.

QUESTION 143
Which of the following types of fraud includes embezzlement?

Fraudulent statements.

Bribery.

Misappropriation of assets.

Corruption.

QUESTION 144
Which of the following actions should an internal auditor take to exercise due professional care?
1. Consider the probability of significant noncompliance in each audit engagement.
2. Weigh the cost of assurance against the benefits.
3. Perform assurance procedures with sufficient care to ensure that all risks are identified.

1 and 2 only

1 and 3 only

2 and 3 only

1, 2, and 3

QUESTION 145
Management of a publicly-held organization requires the internal audit activity to be involved with quarterly financial statements, which are made public and used internally. Which of the following explanations of management’s decision is least plausible?

Management may be concerned about its reputation in the financial markets.

Management is following best-practice protocol, as stipulated by the Standards, which states that internal auditors must review quarterly financial statements.

Management may be concerned about potential penalties that could occur if quarterly financial statements are misstated.

Management may perceive that having quarterly financial information examined by the internal auditors enhances the information’s value to internal decision making.

QUESTION 146
Which of the following is the most significant disadvantage of using checklists to evaluate internal controls?

They serve as a reminder of what controls should exist in a process.

They require yes/no responses to specific questions, not open-ended responses.

They do not capture all controls that may exist.

They are useful in assessing risk.

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