CIA Part1 Quiz

In complying with The IIA Code of Ethics, an internal auditor should

• Go beyond the limitation of personal technical skills to advance the interest of the organization.

• Respect and contribute to the objectives of the organization even if it is engaged in illegal activities

• Use individual judgment in the application of the principles set forth in the Code

• Primarily applies the competency principle in establishing trust

Which of the following concurrent occupations could appear to subvert the ethical behavior of an internal auditor?

• Internal auditor and part-time business insurance broker

• Internal auditor and adjunct faculty member of a local business college that educates potential employees

• Internal auditor and a well-known charitable organization's local in-house chairperson

• Internal auditor and landlord of multiple housing that publicly advertises for tenants in a local community newspaper listing monthly rental fees

Which of the following actions by an internal auditor is most likely a violation of The IIA Code of Ethics?

• Allowing use of the Certified Internal Auditor designation in a context not involving his/her employment

• Accepting payment for teaching auditing at a local university

• Owning a significant amount of stock in a public company that is a competitor

• Accepting a moderate gift from a customer of his/her organization

As part of a company-sponsored award program, an internal auditor was offered an award of significant monetary value by a division in recognition of the cost savings that resulted from the auditor's recommendations. According to the International Professional Practices Framework, what is the most appropriate action for the auditor to take?

• Accept the award under the condition that any proceeds go to charity.

• Inform audit management and ask for direction on whether to accept the gift.

• Decline the gift and advise the division manager's superior.

• Accept the gift since the engagement is already concluded and the report issued.

In which of the following situations would an auditor potentially lack objectivity?

• A former purchasing assistant performs a review of internal controls over purchasing four months after being transferred to the internal audit activity.

• An auditor recommends standards of control and performance measures for a contract with a service organization for the processing of payroll and employee benefits.

• An auditor reviews the procedures for a new electronic data interchange connection to a major customer before it is implemented.

• A payroll accounting employee assists an auditor in verifying the physical inventory of small motors.

A CIA, working as the director of purchasing, signs a contract to procure a large order from the supplier with the best price, quality, and performance. Shortly after signing the contract, the supplier presents the CIA with a gift of significant monetary value. Which of the following statements regarding the acceptance of the gift is correct?

• Since the contract was signed before the gift was offered, acceptance of the gift would not violate either The IIA’s Code of Ethics or the organization’s code of conduct.

• Since the CIA is not acting as an internal auditor, acceptance of the gift would be governed only by the organization’s code of conduct.

• Acceptance of the gift would be prohibited only if it were non-customary.

• Acceptance of the gift would violate The IIA’s Code of Ethics and would be prohibited for a CIA.

An internal auditor assigned to audit a vendor’s compliance with product quality standards is the brother of the vendor’s controller. The auditor should:

• Accept the assignment, but disclose the relationship in the engagement final communication.

• Notify the vendor of the potential conflict of interest.

• Accept the assignment, but avoid contact with the controller during fieldwork.

• Notify the chief audit executive of the potential conflict of interest.

The ability to apply knowledge to situations likely to be encountered and to deal with them without extensive recourse to technical research and assistance is required of internal auditors with respect to which discipline?

• Accounting principles and techniques.

• Marketing techniques.

• Management principles.

• Internal auditing procedures and techniques.

The ability to recognize the existence of problems or potential problems and to determine the further research to be undertaken or the assistance to be obtained is required of internal auditors with respect to which discipline?

• Management principles.

• Accounting principles and techniques.

• Internal auditing procedures and techniques.

• Marketing techniques.

Audit committees are most likely to participate in the approval of:

• Audit staff promotions and salary increases.

• Audit work schedules.

• The internal audit report observations and recommendations.

• The appointment of the chief audit executive.