IIA-CHAL-QISA Online Practice Questions

Explanation:
Introduction:
Engaging an external fraud specialist brings several advantages to an investigation, particularly in preserving the integrity of evidence.
Advantages of External Fraud Specialists:
External specialists bring expertise, objectivity, and resources that may not be available internally.
Options Analysis:
Option A: Access to employees is not necessarily increased with external specialists.
Option B: External fraud specialists have the skills and protocols to preserve evidence and maintain the chain of command, ensuring legal and procedural compliance.
Option C: Scrutinizing business processes is part of their role, but the primary advantage lies in evidence preservation.
Option D: Access to software and proprietary data is not the primary advantage; internal controls can
provide this access as needed.
Conclusion:
The main advantage of utilizing an external fraud specialist is their increased ability to preserve evidence and maintain the chain of command, which is critical in legal and compliance contexts.
Reference: Internal Audit Standards and Practice Guides.

Explanation:
Introduction:
Horizontal analysis involves comparing financial data across multiple periods to identify trends and
patterns over time.
Year-over-Year Trends:
This method helps in understanding changes in financial performance and position year-over-year.
Options Analysis:
Option A: Horizontal analysis is directly related to comparing data year-over-year.
Option B: Vertical analysis involves comparing items on a financial statement as a percentage of a base figure within the same period.
Option C: Common-size analysis is a type of vertical analysis where all items are expressed as a percentage of a common base.
Option D: Ratio analysis evaluates relationships between different financial statement items but is
not primarily focused on year-over-year trends.
Conclusion:
Horizontal analysis is most closely associated with year-over-year trends as it involves reviewing
financial data across periods.
Reference: Financial Analysis and Reporting Guidelines

Explanation:
The IIA's International Standards for the Professional Practice of Internal Auditing (Standards) provide guidance on the reporting requirements of the quality assurance and improvement program. According to Standard 1320, "The chief audit executive must communicate the results of the quality assurance and improvement program to senior management and the board." This communication must include the results of both internal and external assessments and ongoing monitoring. Specifically, the results of ongoing monitoring of the internal audit activity’s performance should be reported to senior management and the board at least annually. This ensures that the internal audit activity maintains its proficiency, enhances its effectiveness, and complies with the Standards.
Reference: IIA Standard 1320

Explanation:
Risk Assessment Process: A risk assessment process is essential for identifying, analyzing, and managing risks that could prevent the achievement of objectives. It is a critical component in developing an effective system of internal controls.
Importance: Without a risk assessment, organizations cannot effectively design controls that address relevant risks.
COSO Framework: The Committee of Sponsoring Organizations (COSO) Internal Control Framework outlines risk assessment as a fundamental part of internal control systems.
Components: The framework includes risk assessment, control activities, information and communication, monitoring activities, and the control environment.
Other Preconditions:
Monitoring Process: Important for evaluating the effectiveness of internal controls but not the initial step.
Strategic Objective-Setting Process: Critical for overall organizational success but does not directly develop internal controls.
Information and Communication Process: Supports internal controls by ensuring relevant information is communicated but follows the identification of risks.
Reference: COSO Internal Control Framework.

Explanation:
Audit workpapers are essential documents that provide evidence of the audit work performed and the conclusions reached.
Option A: While review notes can be useful, they do not need to be retained if they do not add value to the audit evidence.
Option B: Audit workpaper documentation policies are typically established by the internal audit department, not reviewed or approved by the audit committee.
Option C: Management should not review the workpapers for accuracy as this could compromise the independence of the audit.
Option D: Preparing workpapers helps auditors document their work thoroughly, facilitating learning and professional development.