CIA Exam Questions -- II A Code of Ethics

1. A primary purpose for establishing a code of conduct within a professional organization is to
a. Reduce the likelihood that members of the profession will be sued for substandard work
b. Ensure that all members of the profession perform at approximately the same level of competence
c. Demonstrate acceptance of responsibility to the interests of those served by the profession
d. Require members of the profession to exhibit loyalty in all matters pertaining to the affairs of their organization

2. An accounting association established a code of ethics for all members. Identify the association's primary purpose for establishing the code of ethics.
a. To outline criteria for professional behavior to maintain standards of competence, morality, honesty and dignity within the association
b. To establish standards to follow for effective accounting practice
c. To provide a framework within which accounting policies can be effectively developed and executed
d. To outline criteria that can be used in conducting interviews of potential new accountants

3. "Due care implies reasonqble care and competence, not infallibility or extraordinary performance." This statement makes which of the following unnecessary?
a. The conduct of examinations and verifications to a reasonable extent
b. The conduct of extensive examinations
c. The reasonable assurance that compliance does exist
d. The consideration of the possibility of material irregularities

4. An internal auditor observes that a receivables clerk has physical access to and control of cash receipts. The auditor worked with the clerk several years before and has a high level of trust in the individual. Accordingly, the auditor notes in the working papers that controls over receipts are adequate. Is the auditor in compliance with the Standards?
a. Yes, reasonable care has been taken
b. No, irregularities were not noted
c. No, alertness to conditions where irregularities are most likely was not shown
d. Yes, the working papers were annotated

5. The Code of Ethics requires IIA members to exercise three particular qualities in the performance of their duties. These qualities are
a. Honesty, objectivity and dilegence
b. Timeliness, sobriety and clarity
c. Knowledge, skill and discipline
d. Punctuality, loyalty and dignity

6. A Certified Internal Auditor, working for a chemical manufacturer, believed that toxic waste was being dumped in violation of the law. Out of loyalty to the company, no evidence regarding the dumping was collected. The auditor
a. Violated the Code of Ethics by knowingly becoming a party to an illegal act
b. Violated the Code of Ethics by failing to protect the well-being of the general public
c. Did not violate the Code of Ethics. Loyalty to the employer in all matters is required
d. Did not violate the Code of Ethics. Conclusive evidence of wrongdoing was not gathered

7. Which of the following concurrent occupations could appear to subvert the ethical behavior of an internal auditor?
a. Internal auditor and a well-known charitable organization's local in-house chairperson
b. Internal auditor and part-time business insurance broker
c. Internal auditor and adjunct faculty member of local business college that educates potential employees
d. Internal auditor and landlord of apartment buildings that publicly advertise for tenants in local newspapers listing monthly rental fees

8. Internal auditors should be prudent in their relationships with persons and organizations external to their employers. Which of the following activities is least likely to affect internal auditors' ethical behavior adversely?
a. Accepting compensation from professional organizations for consulting work
b. Serving as consultants to competitor organizations
c. Serving as consultants to suppliers
d. Discussing audit plans or results with external parties

9. During the course of an audit, an auditor discovers that a clerk is embezzling company funds. Although this is the first embezzlement ever encountered and the organization has a security department, the auditor decides to personally interrogate the suspect. If the auditor is violating the Code of Ethics, the rule violated is most likely
a. Failing to show due diligence
b. Lack of loyalty to the organization
c. Lack of competence in this area
d. Failing to comply with the law

10. An organization has recently placed a former operating manager in the position of director of internal auditing. The new director is not a member of The IIA and is not a CIA. Henceforth, the internal auditing department will be run strictly by the director's standards, not The IIA's. All four staff members are members of The Institute, but they are not CIAs. According to the Code of Ethics, what is the best course of action for the staff members?
a. The Code does not apply because the auditors are not CIAs.
b. The auditors should adopt suitable means to comply with the Standards
c. The auditors must exhibit loyalty to the organization and ignore the Standards
d. The auditors must resign their jobs to avoid improper activities

11. During an audit, A CIA learned that certain individuals in the organization were involved in industrial espionage for the benefit of the organization. According to the Code of Ethics, identify the auditor's course of action.
a. Report the facts to the appropriate individual within the organization
b. No action is required because this condition is not detrimental to the organization
c. Note the condition in the working papers but refrain from reporting it because it benefits the organization
d. Report the condition to the appropriate government regulatory agency

12. A CIA is found to have committed a very serious violation of the Code of Ethics of The IIA. Which of the following describes the disciplinary action most likely to be imposed by The IIA? The CIA will
a. Be required to take up to 40 hours of appropriate continuing professional education courses
b. Be required to retake the CIA examination
c. Forfeit his or her membership in The Institute
d. Be assessed a fine not to exceeed $1,000

1. C
2. A
3. B
4. C
5. A
6. A
7. B
8. A
9. C
10. B
11. A
12. C