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NEW QUESTION # 56
According to IIA guidance, which of the following should be formally documented in the internal audit charter?
- A. The nature of consulting services provided by the internal audit activity.
- B. The budgeting process for the internal audit activity.
- C. The internal audit activity's responsibility for imposing risk management processes.
- D. The internal audit activity's responsibility for the organization's governance framework.
Answer: A
NEW QUESTION # 57
An internal audit activity is using the auditing-by-element approach to audit the organization's controls around corporate social responsibility. Which of the following would be an element for the internal audit activity to consider?
- A. Shareholders and investors.
- B. Employees' families.
- C. Marketplace competition.
- D. Working conditions.
Answer: B
NEW QUESTION # 58
A snow removal company is conducting a scenario planning exercise where participating employees consider the potential impacts of a significant reduction in annua snowfall for the coming winter. Which of the following best describes this type of risk?
- A. Residual.
- B. Net.
- C. Inherent.
- D. Accepted.
Answer: C
NEW QUESTION # 59
A furniture manufacturer has installed a new fire sprinkler system at its central warehouse and canceled the existing fire insurance policy on that property. What change of risk response strategy does this course of action most likely reflect?
- A. From acceptance to avoidance.
- B. From acceptance to reduction.
- C. From sharing to avoidance.
- D. From sharing to reduction.
Answer: D
NEW QUESTION # 60
A government agency's policy states that board members' travel and hospitality expenses must be audited annually. Which of following people or groups is most appropriate to perform this audit?
- A. The government's independent auditor.
- B. The internal audit activity.
- C. The agency's chief compliance officer.
- D. The external auditors from an accounting firm.
Answer: A
NEW QUESTION # 61
The security department uncovered what appears to be a complex fraud in the accounting department. The CEO has requested the internal audit activity to investigate the fraud. If the internal audit staff lacks the expertise to conduct the investigation, how should the chief audit executive proceed?
- A. Outsource the sensitive investigation to a third-party consultant with fraud expertise.
- B. Select a member of the accounting department who is not involved in the fraud to join the investigation team in a consulting capacity.
- C. Disclose the deficiency, and request that the investigation be reassigned to the first line of defense.
- D. Proceed with the investigation, as internal auditors are not required to have fraud expertise.
Answer: A
NEW QUESTION # 62
The management at a national consumer goods organization implements a fair work and pay practice as well as a policy to treat employees equitably and consistently. Which common characteristics of fraud will the practice and policy most likely reduce?
- A. Commitment.
- B. Opportunity.
- C. Pressure or incentive.
- D. Rationalization.
Answer: C
NEW QUESTION # 63
The chief audit executive (CAE) is planning to conduct an internal assessment of the internal audit activity (IAA). Part of this assessment will include benchmarking. According to IIA guidance, which of the following qualitative metrics would be appropriate for the CAE to use?
1. Average client customer satisfaction score for a given year.
2. Client survey comments on how to improve the IAA.
3. Auditor interviews once an audit has been completed.
4. Percentage of audits completed within 90 days.
- A. 3 and 4.
- B. 1 and 3.
- C. 2 and 3.
- D. 1 and 2.
Answer: C
NEW QUESTION # 64
Which of the following is a requirement for an assurance engagement that may not be for a consulting engagement?
- A. The internal audit activity has to ensure team members' objectivity is not impaired.
- B. The internal audit activity must ensure management actions have been implemented effectively or risk accepted.
- C. Auditors cannot participate in an assurance engagement of a function for which they previously performed a consulting engagement.
- D. The scope and objective of the engagement is agreed upon based on the engagement client's needs.
Answer: C
NEW QUESTION # 65
Which of the following scenarios would represent the greatest threat to the authority of the internal audit activity (IAA)?
- A. The IAA was denied access to expenditure and budget requirement reports because the reports were considered to be financial administrative matters.
- B. A change was implemented requiring the IAA to report administratively to the organization's chief legal counsel rather than the board.
- C. Responsibility for risk management processes were removed from the IAA and placed under a newly created chief risk officer.
- D. An internal auditor was informed by the chief financial officer that client survey results would be unfavorable unless the auditor changed a finding in the report.
Answer: A
NEW QUESTION # 66
Management has asked the chief audit executive (CAE) to provide assurance on the organization's automated control system related to financial data. The current audit staff does not have the expertise needed to conduct this type of engagement. Which of the following would be the best response by the CAE?
- A. Do not accept the assignment because the internal audit activity lacks the competency to perform the engagement with due professional care.
- B. Accept the assignment and use control self-assessment to complete the project.
- C. Accept the assignment and use an external provider with the necessary knowledge and skills to perform the engagement.
- D. Accept the assignment if the engagement is included in the current audit plan, but inform senior management that the current audit staff does not have the knowledge and skills required.
Answer: C
NEW QUESTION # 67
Which of the following control activities is the most effective to ensure users' levels of access are appropriate for their current roles?
- A. Department managers are required to perform periodic user access reviews of relevant systems and applications.
- B. The human resources department generates a monthly list of terminated and transferred employees and requests IT to update the user access as required.
- C. System administrator rights are assigned to one user in each department who can update user access of terminated or transferred employees immediately.
- D. Standardized user access profiles are developed and the appropriate access profiles are automatically assigned to new or transferred employees.
Answer: A
NEW QUESTION # 68
Which of the following would not be considered part of preliminary survey of an engagement area?
- A. Analytical reviews.
- B. Functional walk through test.
- C. Interviews with individuals affected by the entity.
- D. Sampling scope.
Answer: D
NEW QUESTION # 69
Which of the following options is the most cost-effective and efficient way for internal auditors to keep current with the latest developments in the internal audit profession?
- A. Participating in on-the-job training in various departments of the organization.
- B. Maintaining membership in The HA and similar professional organizations and subscribing to relevant email updates or news feeds.
- C. Attending annual professional conferences and seminars.
- D. Pursuing as many professional certifications as possible.
Answer: B
NEW QUESTION # 70
Which of the following would be the most important consideration by the internal audit activity when selecting employees to perform an internal quality assessment?
- A. Their reporting line within the organization.
- B. The nature of their regular duties and responsibilities.
- C. Previous experience working with the internal audit activity.
- D. Their understanding of auditing standards.
Answer: D
NEW QUESTION # 71
An internal auditor notes that employees are able to download files from the internet. According to IIA guidance, which of the following strategies would best protect the organization from the risk of copyright infringement and licensing violations resulting from this practice?
- A. Utilize dedicated and encrypted network connections.
- B. Apply antivirus and patch management software.
- C. Install a software inventory management application.
- D. Utilize secure socket layer encryption.
Answer: C
NEW QUESTION # 72
The last quality assessment of the internal audit activity identified three areas for improvement: the achievement of audit engagement objectives, quality of work, and staff development. According to IIA guidance, which of the following should be the chief audit executive's primary focus to achieve these recommended improvements?
- A. Employment of tools and techniques.
- B. Due professional care.
- C. Demonstrated compliance with procedures.
- D. Engagement supervision.
Answer: D
NEW QUESTION # 73
An internal auditor finds during an engagement that payment for the organization's general insurance policy is two months overdue. The issue is informally mentioned to the finance department which immediately submits the invoice for payment. The auditor decides to exclude this finding from the final audit report as the oversight was immediately corrected and there were no consequences because of this late payment.
Which of the following rules of conduct as described in the IIA Code of Ethics, did the auditor fail to uphold?
- A. Integrity.
- B. Confidentiality.
- C. Competency.
- D. Objectivity.
Answer: D
NEW QUESTION # 74
Reviewing prior audit reports and supporting workpapers before an engagement starts enables an internal auditor to do which of the following?
1. To understand better the activity and processes that will be audited.
2. To identify the audit procedures that will be used during the engagement.
3. To ensure that matters of greatest vulnerability will be addressed.
4. To use the information obtained as evidence in the current engagement.
- A. 1 and 4 only
- B. 4 only
- C. 1 and 3 only
- D. 2, 3, and 4 only
Answer: C
NEW QUESTION # 75
During an audit, the client questions the internal audit activity's authority to perform procedures over fraud allegations. According to HA guidance, which of the following would provide the most relevant support to respond to the client's concerns?
- A. MA Standards.
- B. Definition of Internal Auditing.
- C. Internal audit charter.
- D. The IIA's Code of Ethics.
Answer: C
NEW QUESTION # 76
According to IIA guidance, which of the following statements regarding the internal audit charter is true?
- A. The charter should describe the purpose and authority of the internal audit activity, consistent with the Standards.
- B. Senior management should approve the charter before it is submitted to the board.
- C. The charter should define the consulting services that the internal audit activity is permitted to perform.
- D. The CEO periodically should assess whether the terms of the charter continue to be adequate.
Answer: B
NEW QUESTION # 77
Which of the following is the most significant disadvantage of using checklists to evaluate internal controls?
- A. They require yes/no responses to specific questions, not open-ended responses.
- B. They serve as a reminder of what controls should exist in a process.
- C. They are useful in assessing risk.
- D. They do not capture all controls that may exist.
Answer: D
NEW QUESTION # 78
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