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| Section | Objectives |
|---|---|
| Topic 1: Exam Blueprint (Broad Domains) | - Internal Audit Practice and Knowledge - Other CIA Knowledge Areas (aligned to Global Internal Audit Standards) - Information Systems Audit Topics Not Covered by CISA |
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NEW QUESTION # 165
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?
Answer: A
Explanation:
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.
NEW QUESTION # 166
In the years after the mid-service point of a depreciable asset, which of the following depreciation methods will result in the highest depreciation expense?
Answer: A
Explanation:
Depreciation methods allocate the cost of an asset over its useful life. Different methods impact the depreciation expense reported each year.
* Option A: Sum of the years' digits.
* This is an accelerated depreciation method, which results in higher depreciation expense in the early years but not as high as the double-declining balance method.
* Option B: Declining balance.
* This method also results in higher depreciation expenses in the early years but is less accelerated compared to the double-declining balance method.
* Option C: Double-declining balance.
* This is the most accelerated method of depreciation among the options listed. It results in the highest depreciation expense in the early years of the asset's life. After the mid-service point of the asset, the double-declining balance method will still produce higher depreciation expenses compared to other methods.
* Option D: Straight line.
* This method results in equal depreciation expenses each year over the asset's useful life, leading to lower depreciation expenses in the later years compared to accelerated methods.
NEW QUESTION # 167
Which of the following could increase risks to the organization's control environment?
Answer: D
Explanation:
Incentive-based compensation can increase the risk of unethical behavior or fraudulent activities as employees might be tempted to manipulate results to achieve their performance targets.
This could undermine the control environment and lead to significant risks if not managed properly
NEW QUESTION # 168
A chief audit executive (CAE) identifies that the internal audit activity lacks a necessary skill to perform a management request for a consulting engagement. According to IIA guidance, which of the following Is the most appropriate action the CAE should take regarding the request?
Answer: C
Explanation:
According to the IIA's Standards, specifically Standard 1210 - Proficiency, internal auditors must possess the knowledge, skills, and other competencies needed to perform their individual responsibilities. If the internal audit activity lacks the necessary skill set to conduct a requested consulting engagement, the most appropriate action for the CAE is to decline the engagement request. This ensures that the internal audit activity does not compromise the quality and effectiveness of its services.
NEW QUESTION # 169
When taken by a chief audit executive, which of the following actions would be most likely to prevent division management from exaggerating sales reports
1.Announcing a series of internal audit engagements focusing on compliance with corporate sales-reporting policies.
2.Asking the president and the board to issue a statement of corporate policy stressing the importance of accurate management reporting and the negative consequences of intentional misreporting
3.Setting up a hotline for employees to report fraudulent behavior anonymously.
4.Assisting the controller in developing and monitoring a series of business process indicators, which are historically correlated with, but independent of. sales.
Answer: B
Explanation:
Corporate Policy Statement: Having the president and the board issue a statement stressing the importance of accurate management reporting and the negative consequences of intentional misreporting can help set a tone at the top. This reinforces the significance of ethical behavior and compliance with reporting policies across the organization.
NEW QUESTION # 170
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