Free Access IIA.IIA-CIA-Part1.v2026-07-28.q398 Practice Test (Page 23)

Question 106

Applying ISO 31000, which of the following is part of the external context for risk management?

A.The regulatory and competitive environment

B.Risk treatment method based on risk evaluation.

C.The method of determining the risk level.

D.Organizational culture, objectives, and processes.

Question 107

Which of the following is not part of the five-attribute approach to developing documentation for an audit observation?

A.Management response.

B.Recommendation.

C.Condition.

D.Effect.

Question 108

In which of the following situations would the organizational independence of an internal audit activity be impaired?

A.Scope limitations are imposed on internal audits.

B.The chief audit executive reports administratively to the CEO.

C.The internal audit activity provides assurance services for an activity for which the engagement supervisor had responsibility within the previous year.

D.The compensation committee of the board approves the remuneration of the chief audit executive.

Question 109

The chief commodity trader for a large energy company learns from a friend that a competitor will likely fail its upcoming regulatory audit and will be forced to temporarily decrease production. If the information is true, the trader has short-term opportunities to make trades that will financially benefit the trader's company and will lead to a substantial increase in the trader's performance bonus. However, if the information is not true, making the trades will significantly increase the company's risk of being caught in a long position. From an ethical perspective, which of the following would be the most appropriate course of action for the trader to take?

A.Make the trade because the company and the trader will both benefit.

B.Have another trader on staff make the trade in order to avoid a conflict of interest.

C.Disclose the information to the risk oversight committee but proceed with the trade to capitalize on the opportunity.

D.Defer the decision to management and risk the loss of the trading opportunity.

Question 110

Which of the following is an example of an impairment to an internal auditor's independence?

A.An internal auditor delays reporting material financial statement audit findings until after his parents sell all of their stock in the company

B.A new member of the internal audit activity, who was the accounts payable supervisor for two years, is asked to consult on the implementation of a new accounts payable system

C.Believing there must be errors in a given balance sheet account the internal auditor decides to expand his testing

D.Following the restructuring of the organization, the internal audit activity now reports functionally to the chief financial officer

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Question 106

Question 107

Question 108

Question 109

Question 110

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