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Exam Code: IIA-CIA-Part1
Exam Name: Certified Internal Auditor - Part 1, The Internal Audit Activity's Role in Governance, Risk, and Control
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Exam Code: IIA-CIA-Part2
Exam Name: Certified Internal Auditor - Part 2, Conducting the Internal Audit Engagement
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Exam Code: IIA-CIA-Part3
Exam Name: Certified Internal Auditor - Part 3, Business Analysis and Information Technology
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NO.1 In response to an audit finding, senior management informed the auditor that the issue would
be investigated and resolved when time permitted. According to the International Professional
Practices Framework, this action was not acceptable because:
A. The appropriate level of management was not involved in the review and resolution of the issue.
B. Other departments should have been contacted to determine if they shared responsibility for
corrective action.
C. The board had not reviewed management's responses to the engagement observations and
recommendations.
D. Responses should include sufficient information to evaluate the adequacy and timeliness of
corrective action.
Answer: D

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NO.2 During an audit of a retail organization, an internal auditor found a scheme in which the
warehouse director and the purchasing agent diverted approximately $500,000 of goods to their own
warehouse, then sold the goods to third parties. The fraud was not found earlier since the warehouse
director updated the perpetual inventory records and then forwarded receiving reports to the
accounts payable department for processing. Which of the following procedures would have most
likely led to the discovery of the missing materials and the fraud?
A. Select a random sample of purchase orders and trace to receiving reports and to the records in the
accounts payable department.
B. Select a random sample of receiving reports and trace to the recording in the perpetual inventory
records. Note differences and investigate by type of product.
C. Take an annual physical inventory, reconciling amounts with the perpetual inventory records. Note
the pattern of differences and investigate.
D. Select a random sample of sales invoices and trace to the perpetual inventory records to see if
inventory was on hand. Investigate any differences.
Answer: C

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