IIA Certified Internal Auditor Part 1 (Essentials of Internal Auditing CIA Part 1) Practice Test

CIA-I Exam Format | Course Contents | Course Outline | Exam Syllabus | Exam Objectives

Part 1 – Essentials of Internal Auditing
125 questions I 2.5 hours (150 minutes)

The CIA exam Part 1 is well aligned with The IIAs International Professional Practices Framework (IPPF) and includes six domains covering the foundation of internal auditing; independence and objectivity; proficiency and due professional care; quality assurance and improvement programs; governance, risk management, and control; and fraud risk. Part one tests candidates knowledge, skills, and abilities related to the International Standards for the Professional Practice of Internal Auditing, particularly the Attribute Standards (series 1000, 1100, 1200, and 1300) as well as Performance Standard 2100.

Part 2 – Practice of Internal Auditing
100 questions I 2.0 hours (120 minutes)

The CIA exam Part 2 includes four domains focused on managing the internal audit activity, planning the engagement, performing the engagement, and communicating engagement results and monitoring progress. Part 2 tests candidates knowledge, skills, and abilities particularly related to Performance Standards (series 2000, 2200, 2300, 2400, 2500, and 2600) and current internal audit practices.

Part 3 – Business Knowledge for Internal Auditing
100 questions I 2.0 hours (120 minutes)

The CIA exam Part 3 includes four domains focused on business acumen, information security, information technology, and financial management. Part Three is designed to test candidates knowledge, skills, and abilities particularly as they relate to these core business concepts.

CIA Exam Development and Scoring
The CIA exam is developed following best practices with the support of experts and professionals. Learn more about the exam development process and how exams are scored.

The revised CIA exam Part 1 is well aligned with The IIAs International Professional Practices Framework (IPPF) and includes six domains covering the foundation of internal auditing; independence and objectivity; proficiency and due professional care; quality assurance and improvement programs; governance, risk management, and control; and fraud risk. Part One tests candidates knowledge, skills, and abilities related to the International Standards for the Professional Practice of Internal Auditing, particularly the Attribute Standards (series 1000, 1100, 1200, and 1300) as well as Performance Standard 2100.​

Domains Collapse All
I. Foundations of Internal Auditing (15%)
​ ​ ​Cognitive Level
A​ ​​Interpret The IIA's Mission of Internal Audit, Definition of Internal Auditing, and Core Principles for the Professional Practice of Internal Auditing, and the purpose, authority, and responsibility of the internal audit activity Proficient
​B ​Explain the requirements of an internal audit charter (required components, board approval, communication of the charter, etc.) Basic
​C ​Interpret the difference between assurance and consulting services provided by the internal audit activity ​Proficient
​D ​Demonstrate conformance with the IIA Code of Ethics ​​Proficient
II. ​Independence and Objectivity (15%)
​ ​ ​Cognitive Level
A​ ​​Interpret organizational independence of the internal audit activity (importance of independence, functional reporting, etc.) Basic
​B ​Identify whether the internal audit activity has any impairments to its independence Basic
​C ​Assess and maintain an individual internal auditor's objectivity, including determining whether an individual internal auditor has any impairments to his/her objectivity ​Proficient
​D ​Analyze policies that promote objectivity ​​Proficient
III. Proficiency and Due Professional Care (18%)​
​ ​ ​Cognitive Level
A​ ​​Recognize the knowledge, skills, and competencies required (whether developed or procured) to fulfill the responsibilities of the internal audit activity Basic
​B ​Demonstrate the knowledge and competencies that an internal auditor needs to possess to perform his/her individual responsibilities, including technical skills and soft skills (communication skills, critical thinking, persuasion/negotiation and collaboration skills, etc.) Proficient
​C Demonstrate due professional care ​Proficient
​D Demonstrate an individual internal auditor's competency through continuing professional development ​​Proficient
IV. Quality Assurance and Improvement Program (7%)​
​ ​ ​Cognitive Level
A​ ​​Describe the required elements of the quality assurance and improvement program (internal assessments, external assessments, etc.) Basic
​B ​Describe the requirement of reporting the results of the quality assurance and improvement program to the board or other governing body Basic
​C ​​Identify appropriate disclosure of conformance vs. nonconformance with The IIAs International Standards for the Professional Practice of Internal Auditing Basic
V. Governance, Risk Management, and Control (35%)
​ ​ ​Cognitive Level
A​ ​​Describe the concept of organizational governance Basic
​B ​Recognize the impact of organizational culture on the overall control environment and individual engagement risks and controls Basic
​C ​Recognize and interpret the organization's ethics and compliance-related issues, alleged violations, and dispositions ​Basic
​D ​Describe corporate social responsibility ​​Basic
​E ​Interpret fundamental concepts of risk and the risk management process Proficient​
​F ​Describe globally accepted risk management frameworks appropriate to the organization (COSO - ERM, ISO 31000, etc.) Basic​
G​ ​Examine the effectiveness of risk management within processes and functions ​Proficient
​H ​Recognize the appropriateness of the internal audit activitys role in the organization's risk management process ​Basic
​I ​Interpret internal control concepts and types of controls ​Proficient
​J ​Apply globally accepted internal control frameworks appropriate to the organization (COSO, etc.) ​Proficient
​K ​Examine the effectiveness and efficiency of internal controls Proficient​
VI. Fraud Risks (10%)​
​ ​ ​Cognitive Level
A​ ​​Interpret fraud risks and types of frauds and determine whether fraud risks require special consideration when conducting an engagement Proficient
​B ​Evaluate the potential for occurrence of fraud (red flags, etc.) and how the organization detects and manages fraud risks Proficient
​C ​Recommend controls to prevent and detect fraud and education to improve the organization's fraud awareness ​Proficient
​D ​Recognize techniques and internal audit roles related to forensic auditing (interview, investigation, testing, etc.) ​​Basic
Additional noteworthy elements related to the revised CIA Part One exam syllabus:

IPPF elements such as the Mission of Internal Audit and Core Principles for the Professional Practice of Internal Auditing are included.
The syllabus features greater alignment with The IIAs Attribute Standards.
The exam covers the differences between assurance and consulting engagements.
The exam covers appropriate disclosure of conformance vs. nonconformance with the Standards.
The largest domain is “Governance, Risk Management, and Control,” which makes up 35%of the exam.
A portion of the exam requires candidates to demonstrate a basic comprehension of concepts; another portion requires candidates to demonstrate proficiency in their knowledge, skills, and abilities.

The Certified Internal Auditor® (CIA®) exam is developed following best practices with the support of experts and professionals. In accordance with exam development industry standards, a job analysis study is conducted with a diverse and experienced group of internal auditors to identify the essential knowledge and skills required for internal auditors.
This information is then distributed more broadly to the field through an online survey to obtain additional feedback from internal auditors around the world, to validate its importance and ensure that it reflects current internal audit practices.
Based on the results of the global job analysis study, the CIA exam syllabus is developed. The exam syllabus guides the development of exam questions to ensure the fairness and validity of the exam.

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QUESTION: 225
To identify those components of a telecommunications system that present the greatest
risk, an internal auditor should first
A. Review the open systems interconnect network model.
B. Identify the network operating costs.
C. Determine the business purpose of the network.
D. Map the network software and hardware products into their respective layers.
Answer: C
QUESTION: 226
An auditor plans to analyze customer satisfaction, including (1) customer complaints
recorded by the customer service department during the last three months; (2)
merchandise returned in the last three months; and (3) responses to a survey of
customers who made purchases in the last three months. Which of the following
statements regarding this audit approach is correct?
A. Although useful, such an analysis does not address any risk factors.
B. The survey would not consider customers who did not make purchases in the last
three months.
C. Steps 1 and 2 of the analysis are not necessary or cost-effective if the customer
survey is comprehensive.
D. Analysis of three months' activity would not evaluate customer satisfaction.
Answer: B
QUESTION: 227
When internal auditors provide consulting services, the scope of the engagement is
primarily determined by
A. Internal auditing standards.
B. The audit engagement team.
C. The engagement client.
D. The internal audit activity's charter.
Answer: C
QUESTION: 228
An internal auditor is assigned to conduct an audit of security for a local area network
(LAN) in the finance department of the organization. Investment decisions, including
the use of hedging strategies and financial derivatives, use data and financial models
which run on the LAN. The LAN is also used to download data from the mainframe to
assist in decisions. Which of the following should be considered outside the scope of
this security audit engagement?
A. Investigation of the physical security over access to the components of the LAN.
B. The ability of the LAN application to identify data items at the field or record level
and implement user access security at that level.
C. Interviews with users to determine their assessment of the level of security in the
system and the vulnerability of the system to compromise.
D. The level of security of other LANs in the company which also utilize sensitive data.
Answer: D
QUESTION: 229
At the beginning of fieldwork in an audit of investments, an internal auditor noted that
the interest rate had declined significantly since the engagement work program was
created. The auditor should
A. Proceed with the existing program since this was the original scope of work that was
approved.
B. Modify the audit program and proceed with the engagement.
C. Consult with management to verify the interest rate change and proceed with the
engagement.
D. Determine the effect of the interest rate change and whether the program should be
modified.
Answer: D
QUESTION: 230
Which of the following measurements could an auditor use in an audit of the efficiency
of a motor vehicle inspection facility?
A. The total number of cars approved.
B. The ratio of cars rejected to total cars inspected.
C. The number of cars inspected per inspection agent.
D. The average amount of fees collected per cashier.
Answer: C
QUESTION: 231
A bakery chain has a statistical model that can be used to predict daily sales at
individual stores based on a direct relationship to the cost of ingredients used and an
inverse relationship to rainy days. What conditions would an auditor look for as an
indicator of employee theft of food from a specific store?
A. On a rainy day, total sales are greater than expected when compared to the cost of
ingredients used.
B. On a sunny day, total sales are less than expected when compared to the cost of
ingredients used.
C. Both total sales and cost of ingredients used are greater than expected.
D. Both total sales and cost of ingredients used are less than expected.
Answer: B
QUESTION: 232
Which of the following procedures would provide the best evidence of the effectiveness
of a credit-granting function?
A. Observe the process.
B. Review the trend in receivables write-offs.
C. Ask the credit manager about the effectiveness of the function.
D. Check for evidence of credit approval on a sample of customer orders.
Answer: B
QUESTION: 233
An organization has developed a large database that tracks employees, employee
benefits, payroll deductions, job classifications, and other similar information. In order
to test whether data currently within the automated system are correct, an auditor should
A. Use test data and determine whether all the data entered are captured correctly in the
updated database.
B. Select a sample of data to be entered for a few days and trace the data to the updated
database to determine the correctness of the updates.
C. Use generalized audit software to provide a printout of all employees with invalid job
descriptions. Investigate the causes of the problems.
D. Use generalized audit software to select a sample of employees from the database.
Verify the data fields.
Answer: D
QUESTION: 234
Senior management at a financial institution has received allegations of fraud at its
derivatives trading desk and has asked the internal audit activity to investigate and issue
a report concerning the allegations. The internal audit activity has not yet developed
sufficient proficiency regarding derivatives trading to conduct a thorough fraud
investigation in this area. Which of the following courses of action should the chief
audit executive (CAE) take to comply with the Standards?
A. Engage the former head of the institution's derivatives trading desk to perform the
investigation and submit a report with supporting documentation to the CAE.
B. Request that senior management allow a delay of the fraud investigation until the
internal audit activity's on-staff certified fraud examiner is able to obtain the appropriate
training regarding the analysis of derivatives trading.
C. Request that senior management exclude the internal audit activity from the
investigation completely and instead contract with an external certified fraud examiner
with derivatives experience to perform all aspects of the investigation and subsequent
reporting.
D. Contract with an external certified fraud examiner with derivatives experience to
perform the investigation and subsequent reporting, with the chief audit executive
approving the scope of the investigation and evaluating the adequacy of the work
performed.
Answer: D
QUESTION: 235
According to the International Professional Practices Framework, internal auditors
should possess which of the following competencies?
I. Proficiency in applying internal auditing standards, procedures, and techniques.
II. Proficiency in accounting principles and techniques.
III. An understanding of management principles.
IV. An understanding of the fundamentals of economics, commercial law, taxation,
finance, and quantitative methods.
A. I only.
B. II only.
C. I and III only.
D. I, III, and IV only.
Answer: D
QUESTION: 236
Which of the following are acceptable resources for a chief audit executive to use when
developing a staffing plan?
I. Co-sourcing arrangements.
II. Employees from other areas of the organization.
III. The organization's external auditors.
IV. The organization's audit committee members.
A. I only.
B. I and II only.
C. II and IV only.
D. I, II, and IV only.
Answer: B
QUESTION: 237
Which of the following would be a violation of the IIA Code of Ethics?
A. Reporting information that could be damaging to the organization, at the request of a
court of law.
B. Including an issue in the final audit report after management has resolved the issue.
C. Participating in an audit engagement for which the auditor does not have the
necessary experience or training.
D. Accepting a gift that is a commercial advertisement available to the public.
Answer: C
QUESTION: 238
Which of the following is not an appropriate objective for a quality assurance and
improvement program?
A. Continually monitor the internal audit activity's effectiveness.
B. Assure conformance with the Standards and Code of Ethics.
C. Perform an internal assessment at least once every five years.
D. Communicate the results of quality assessments to the board.
Answer: C
QUESTION: 239
According to the International Professional Practices Framework, which of the
following is true with respect to the different roles in the risk management process?
I. Boards have an oversight role.
II. Acceptance of residual risks can reside with the chief audit executive.
III. The board can delegate the operation of the risk management framework to the
management team.
IV. The internal audit activity's role can range from having no responsibilities to
managing and coordinating the process.
A. I only.
B. II and IV only.
C. I, III, and IV only.
D. I, II, III, and IV.
Answer: C
QUESTION: 240
Which of the following types of risk factors are used within risk models to establish the
priority of internal audit engagements?
I. Management competence.
II. Quality of internal controls.
III. Audit staff experience.
IV. Regulatory requirements.
A. II only.
B. I, II, and III only.
C. I, II, and IV only.
D. I, III, and IV only.
Answer: C
QUESTION: 241
Which of the following is not an appropriate type of coordination between the internal
audit activity and regulatory auditors?
A. Regulatory auditors share their perspective on risk management, control, and
governance with the internal auditors.
B. Internal auditors perform fieldwork at the direction of the regulatory auditors.
C. Internal auditors review copies of regulatory reports in planning related internal
engagements.
D. Regulatory and internal auditors exchange information about planned activities.
Answer: B
QUESTION: 242
An organization's accounts payable function improved its internal controls significantly
after it received an unsatisfactory audit report. When planning a follow-up audit of the
function, what level of detection risk should be expected if the audit and sampling
procedures used are unchanged from the prior audit?
A. Detection risk is lower because control risk is lower.
B. Detection risk is lower because control risk is higher.
C. Detection risk is higher because control risk is lower.
D. Detection risk is unchanged although control risk is lower.
Answer: D
QUESTION: 243
Which of the following is an appropriate role for the board in governance?
A. Preparing written organizational policies that relate to compliance with laws,
regulations, ethics, and conflicts of interest.
B. Ensuring that financial statements are understandable, transparent, and reliable.
C. Assisting the internal audit activity in performing annual reviews of governance.
D. Working with the organization's attorneys to develop a strategy regarding current
litigation, pending litigation, or regulatory proceedings governance.
Answer: B
QUESTION: 244
According to the International Professional Practices Framework, which of the
following are allowable activities for an internal auditor?
I. Advocating the establishment of a risk management function.
II. Identifying and evaluating significant risk exposures during audit engagements.
III. Developing a risk response for the organization if there is no chief risk officer.
IV. Benchmarking risk management activities with other organizations.
V. Documenting risk mitigation strategies and techniques.
A. IV and V only.
B. I, II, and III only.
C. I, II, IV, and V only.
D. II, III, IV, and V only.
Answer: C
QUESTION: 245
According to the International Professional Practices Framework, which of the
following should be stated in the internal audit charter?
I. Authorization for access to records.
II. The internal audit activity's position within the organization.
III. The relationship between the internal audit activity and the board.
IV. The scope of internal audit activities.
A. I and IV only.
B. II and III only.
C. I, II, and IV only.
D. I, II, III, and IV.
Answer: C
QUESTION: 246
Which of the following is not an appropriate role for internal auditors after a disaster
occurs?
A. Monitor the effectiveness of the recovery and control of operations.
B. Correct deficiencies of the entity's business continuity plan.
C. Recommend future improvements to the entity's business continuity plan.
D. Assist in the identification of lessons learned from the disaster and the recovery
operations.
Answer: B
QUESTION: 247
Which component is the foundation of the COSO internal control framework?
A. Risk assessment.
B. Control environment.
C. Control activities.
D. Monitoring.
Answer: B
QUESTION: 248
Which of the following best describes the underlying premise of the COSO enterprise
risk management framework?
A. Management should set objectives before assessing risk.
B. Every entity exists to provide value for its stakeholders.
C. Policies are established to ensure that risk responses are performed effectively.
D. Enterprise risk management can minimize the impact and likelihood of unanticipated
events.
Answer: B
QUESTION: 249
Which of the following is an example of sharing risk?
A. An organization redesigned a business process to change the risk pattern.
B. An organization outsourced a portion of its services to a third-party service provider.
C. An organization sold an unprofitable business unit to its competitor.
D. In order to spread total risk, an organization used multiple vendors for critical
materials.
Answer: B
QUESTION: 250
A records management system is an example of what type of control?
A. Preventive.
B. Detective.
C. Corrective.
D. Directive.
Answer: A
QUESTION: 251
Which of the following procedures is not a step that an auditor would perform when
planning an audit of an organization?
A. Obtaining detailed knowledge about the organization.
B. Obtaining a management representation letter.
C. Assessing the audit risk of the organization.
D. Having discussions with the organization's management team.
Answer: B
QUESTION: 252
Which of the following risk assessment tools would best facilitate the matching of
controls to risks?
A. Control matrix.
B. Internal control questionnaire.
C. Control flowchart.
D. Program evaluation and review technique (PERT) analysis.
Answer: A
QUESTION: 253
Which of the following factors should be considered when determining the staff
requirements for an audit engagement?
I. The internal audit activity's time constraints.
II. The nature and complexity of the area to be audited.
III. The period of time since the area was last audited.
IV. The auditors' preference to audit the area.
V. The results of a preliminary risk assessment of the activity under review.
A. I and IV only.
B. I, II, and V only.
C. II, III, and V only.
D. I, II, III, IV, and V.
Answer: B
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