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Qualified Internal Auditor

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Total Questions : 80

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Question # 1

The requirements for staffing level, education and training, and audit research should be included in

Options:

A.  

The internal auditing department's charter.

B.  

The internal auditing department's policies and procedures manual.

C.  

The annual plan for the internal auditing department.

D.  

Job descriptions for the various staff positions.

Discussion 0
Question # 2

Which of the following control procedures would provide the greatest assurance that all donations to a non-profit organization are immediately deposited to the organization’s account?

Options:

A.  

Use a lockbox to receive all donations.

B.  

Perform periodic internal audits of theorganization’scash receipts by tracing deposits to the original posting in the cash receipts records.

C.  

Require that all donations be made by cheque.

D.  

Require issuance of a confirmation receipt to all donors, with the receipt issued by the person who opens and deposits the cash receipts.

Discussion 0
Question # 3

To test compliance with a policy regarding sales returns recorded during the most recent year, an auditor systematically selected 5% of the actual returns recorded in March and April. Returns during these two busiest months of the year represented about 25% of total annual returns.

Error projections from this sample have limited usefulness because

Options:

A.  

The small size of the sample relative to the population makes sampling risk unacceptable.

B.  

The failure to stratify the population according to sales volume results in bias.

C.  

The systematic selection of returns during the two months is not sufficiently random.

D.  

The error rates during the two busiest months may not be representative of the whole year.

Discussion 0
Question # 4

An audit team has been assigned to review ‘the customer satisfaction measurement system’ that the industrial products division implemented two years ago. This system consists of the division's customer service office conducting an annual mail survey. A survey is sent to 100 purchasing departments randomly selected from all customers who made purchases in the prior 12 months. The survey is three pages long and its 30 questions use a mixture of response modes (e.g., some questions are open-ended, some multiple choice, and others use a response scale). The customer service office mails the survey in September and tabulates the results for questionnaires returned by October 15. Only one mail is sent. If the customer does not return the questionnaire, no follow-up is conducted. When the survey was last conducted, 45 of the questionnaires were not returned.

Which of the following is not an advantage of face-to-face interviews over mail surveys?

Options:

A.  

The response rate is typically higher.

B.  

Interviewers can increase a respondent's comprehension of questions.

C.  

Survey designers can use a wider variety of types of questions.

D.  

They are less expensive since mailing costs are avoided.

Discussion 0
Question # 5

Each individual work paper should, at a minimum, contain

Options:

A.  

An expression of an audit opinion.

B.  

A tick mark legend.

C.  

A complete flowchart of the system of internal controls for the area being reviewed.

D.  

A descriptive heading.

Discussion 0
Question # 6

An example of an internal non-financial benchmark is

Options:

A.  

Thelaborrate of comparably skilled employees at a major competitor's plant.

B.  

The average actual cost per pound of a specific product at the company's most efficient plant becomes the benchmark for the company's other plants.

C.  

The company setting a benchmark of $50,000 for employee training programs at each of the company's plants.

D.  

The percent of customer orders delivered on time at the company's most efficient plant becomes the benchmark for the company’s other plants.

Discussion 0
Question # 7

Your assurance firm is auditor of Happy Goods. The audit manager has just become engaged to the managing director’s daughter, who he met through a mutual friend. The managing director owns 51% of the shares in Happy Goods. Which of the threat is not there in this case?

Options:

A.  

Intimidation threat

B.  

Familiarity threat

C.  

Self-interest threat

D.  

Advocacy threat

Discussion 0
Question # 8

An internal auditor plans to use an analytical review to verify the correctness of various operating expenses in a division.

The use of an analytical review as a verification technique would not be a preferred approach if

Options:

A.  

The auditor notes strong indicators of a specific fraud involving this account.

B.  

The company has relatively stable operations that have not changed much over the past year.

C.  

The auditor would like to identify large, unusual, or nonrecurring transactions during the year.

D.  

The operating expenses vary in relation to other operating expenses, but not in relation to revenue.

Discussion 0
Question # 9

In an audit of the procurement system, which of the following procedures would an auditor perform to determine whether competitive bidding procedures were adequate?

I. Bids are solicited based on properly approved requests.

II. A sufficient number of vendors were selected to ensure competition.

III. Incoming bids are first returned to the buyer for control purposes.

Options:

A.  

I and III.

B.  

II and III.

C.  

I, II, and III.

D.  

I and II.

Discussion 0
Question # 10

Which of the following is not an argument for principles-based approach to corporate governance?

Options:

A.  

The same rules might not be suitable for every company

B.  

There are some aspects of corporate governance that cannot be regulated easily

C.  

Companies do not have the choice of ignoring the rules

D.  

The most suitable corporate governance practices can differ between companies

Discussion 0
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