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IIA IIA-CIA-Part1 Exam
CIA Part 1 - Essentials of Internal Auditing (Page 11 )

Updated On: 1-Feb-2026
Page 11 of 115
PDF with 1175 Questions

Fraud is most frequently detected by:

  1. Following up on tips from employees or citizens.
  2. Following up on analytical review of high-risk areas.
  3. Performing periodic reconciliations over cash and other assets.
  4. Performing unannounced audits or reviews of programs or departments.

Answer(s): A



After several years in the engineering department, an engineer was transferred to the internal audit department. One month later, the new auditor was assigned to an assurance engagement for the engineering department. When the auditor's former engineering supervisor suggested a change in the sample selection method, the auditor consulted with the audit supervisor. They determined that the suggested method would not be as representative and that the original selection method should be used. In this situation, the auditor:

  1. Maintained an independent mental attitude and is therefore objective.
  2. Has subordinated professional judgment,and objectivity is therefore impaired.
  3. Does not have objectivity since the auditor recently transferred from the engineering department.
  4. Does not have independent organizational status since the auditor recently transferred from the engineering department.

Answer(s): C



A charitable organization provides substantial grants for important medical research. Assuming marginal controls are in place, which of the following possible frauds or misuses of organization assets should be considered the area of greatest risk?

  1. Senior executives are using company travel and entertainment funds for activities that might be considered questionable.
  2. Purchases of office supplies are made from fictitious vendors.
  3. Grants are made to organizations associated with senior executives.
  4. A payroll clerk has added a fictitious employee.

Answer(s): C



If earnings on financial statements for internal use only have been manipulated in the past, an internal auditor is likely to focus on which of the following?

  1. The proper accrual of payables at the end of the interim period.
  2. The timing of revenue recognition and the valuation of inventories.
  3. Whether accounting estimates are reasonable given past actual results.
  4. Whether there have been changes in accounting principles that materially affect the financial statements.

Answer(s): B



Which of the following procedures would provide the best evidence of the effectiveness of a credit- granting function?

  1. Observe the process.
  2. Review the trend in receivables write-offs.
  3. Ask the credit manager about the effectiveness of the function.
  4. Check for evidence of credit approval on a sample of customer orders.

Answer(s): B



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