IIA CIA Part 1 - Internal Audit Fundamentals CIA-Part1-2025 Dumps in PDF

Free IIA CIA-Part1-2025 Real Questions (page: 14)

An internal auditor interviews for a position within the organization’s IT department while simultaneously conducting an audit of the area’s ability to manage the organization’s user network accounts. This presents a conflict of which of the following principles?

  1. Confidentiality.
  2. Objectivity.
  3. Competency.
  4. Integrity.

Answer(s): B

Explanation:

Interviewing for a position within the audited IT department creates a personal interest that could impair impartial judgment. This situation threatens the auditor’s ability to remain unbiased and independent in evaluating the area, thereby compromising objectivity.



Which of the following will help the chief audit executive (CAE) of a large organization ensure that the independence of the internal audit function is maintained?

  1. The board is required to approve the salary package for all audit staff.
  2. The internal audit charter is approved by the CAE.
  3. The internal audit budget and resource plan are approved by the board.
  4. The decision regarding the appointment or termination of the CAE belongs to the CEO.

Answer(s): C

Explanation:

Board approval of the internal audit budget and resource plan helps safeguard independence by ensuring that internal audit has sufficient resources and is not subject to undue influence from management. Oversight by the board strengthens organizational independence and supports the function’s ability to perform its responsibilities objectively.



Which of the following statements is true regarding organizationwide risk management?

  1. Risk management is a function centralized at the top-level of management.
  2. Risk management centers on inventorying the applicable risks to the organization.
  3. Risk management is complementary to the system of internal controls.
  4. Risk management centers on governance and culture.

Answer(s): C

Explanation:

Organizationwide risk management and internal control systems are complementary. Risk management focuses on identifying, assessing, and responding to risks, while internal controls are mechanisms designed to mitigate those risks. Together, they support effective governance and achievement of organizational objectives.



An organization uses hedging to address foreign currency risk.
Which of the following best describes this risk strategy?

  1. Avoidance.
  2. Acceptance.
  3. Reduction.
  4. Sharing.

Answer(s): D

Explanation:

Hedging transfers or shares the financial impact of foreign currency risk with another party, such as through derivatives or forward contracts. This approach does not eliminate the risk but reallocates its potential impact, which characterizes a risk-sharing strategy.



A financial institution intends to contract a data center management service provider to host and manage the data in its custody as a response to data security and protection risks.
What technique is being adopted by this organization?

  1. Risk acceptance.
  2. Risk avoidance.
  3. Risk sharing.
  4. Risk reduction.

Answer(s): C

Explanation:

Contracting a data center management service provider transfers part of the responsibility and potential impact of data security risks to a third party. This represents risk sharing, as the organization allocates the risk to another entity through contractual arrangements rather than retaining it entirely.



During an internal audit of an organization’s fixed assets, an internal auditor finds that several assets are not recorded in the organization’s ledger but are physically present during the site review. The equipment is in poor condition, suggesting it has been used for a long time.
Which of the following actions should the auditor take?

  1. Inform management of potential theft and suggest performing a physical inventory.
  2. Perform additional tests to investigate possible overstating of fixed assets.
  3. Ask the asset manager about the unrecorded assets to clarify the issue.
  4. Suggest management write off the equipment as it is in poor condition.

Answer(s): C

Explanation:

When unrecorded assets are identified, the auditor should first seek clarification from the responsible asset manager to understand the reason for the discrepancy. Gathering additional information is necessary before drawing conclusions or recommending corrective actions.



Which type of engagement would be the most appropriate to assess the maturity and rigor of the organizationwide risk management process of a target entity that management is considering acquiring?

  1. A due diligence engagement.
  2. An operational audit engagement.
  3. A feasibility study engagement.
  4. A risk and control self-assessment engagement.

Answer(s): A

Explanation:

When evaluating a target entity in a potential acquisition, a due diligence engagement is most appropriate. It involves assessing the maturity, effectiveness, and rigor of key processes such as organizationwide risk management to identify exposures and inform management’s decision-making before completing the transaction.



Which of the following roles related to the organization’s risk management is required of the internal audit function, according to IIA guidance?

  1. Consolidating reporting on the organization’s risk management.
  2. Determining whether risk management processes are effective.
  3. Advising on risk responses that will ensure the organization’s risk levels are within its established risk appetite.
  4. Coordinating the organization’s risk management activities.

Answer(s): B

Explanation:

According to IIA guidance, internal audit is required to provide independent assurance on the effectiveness of the organization’s risk management processes. Evaluating whether risk management is designed and operating effectively is a core assurance responsibility of the internal audit function.



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