IIA IIA-CIA-Part2 Test Engine Practice Test Questions, Exam Dumps
100% Free IIA-CIA-Part2 Daily Practice Exam With 603 Questions
NEW QUESTION # 330
A chief audit executive agrees to conduct an engagement that will focus on customers' perceptions of the quality of the organization's products and services. Which of the following issues should be addressed first?
- A. Quality control.
- B. Cost-effectiveness.
- C. Supplier deliveries.
- D. Customer complaints.
Answer: D
Explanation:
Section: Volume B
NEW QUESTION # 331
According to IIA guidance, which of the following reflects a characteristic of sufficient and reliable information?
- A. The standardization of workpaper terminology and notations
- B. The ability to reach consistent audit conclusions regardless of who performs the audit
- C. The application of documentation standards m an appropriate and consistent manner
- D. The establishment of an audit approach and documentation system
Answer: B
NEW QUESTION # 332
As part of an operational audit of the shipping department, an auditor selected a sample of 45 daily shipping logs from the department's files. On 44 of the days, the log contained a sufficient number of shipments to meet the department's daily quota. Based on this test, the auditor concluded that the shipping department was effective at meeting its quotas. Which of the following is true about the auditor's conclusion?
- A. The shipping department is effective in meeting its responsibilities.
- B. None of the above.
- C. The number of items selected for testing is inadequate to justify the conclusion.
- D. This conclusion would negate any need to perform tests of efficiency.
Answer: B
Explanation:
Section: Volume A
NEW QUESTION # 333
An internal auditor is analyzing sates records and is concerned whether a transaction is recorded in the coned period. The accounting manager explains that the external auditor approved the records and produces an email from the external audit team leader. How should tie internal auditor respond?
- A. Interview the chief financial officer and obtain her opinion on how the transactions should be recorded
- B. Consult account accounting principles, standards, and relevant guidelines in regard to timing of the entry
- C. Compare the recording of this transaction to now similar ones were executed last year
- D. Ask the external auditor to review the same transaction again as an independent third party
Answer: B
NEW QUESTION # 334
Which of the following would not be an appropriate step for an internal auditor to perform during an assessment of compliance with an organization's privacy policy?
- A. Evaluate the government's security measures related to confidential information received from the organization.
- B. Evaluate the organization's privacy policy to determine if appropriate information is covered.
- C. Determine who can access databases containing confidential information.
- D. Analyze access to permanent files and reports containing confidential information.
Answer: A
NEW QUESTION # 335
Which of the following parties is accountable for ensuring adequate support for conclusions and opinions readied by the internal audit activity while relying on external auditors' work?
- A. Board of directors
- B. Chief audit executive
- C. External auditors
- D. Senior management
Answer: B
Explanation:
The chief audit executive (CAE) is accountable for ensuring that adequate support exists for the conclusions and opinions formed by the internal audit activity. When relying on the work of external auditors, the CAE must ensure that the work is sufficient and appropriate to support the internal audit conclusions. This involves reviewing the external auditors' work to confirm its relevance and reliability, and integrating it into the internal audit processes as necessary.
:
The Institute of Internal Auditors (IIA) Standard 2050 - Coordination and Reliance.
IIA Standard 2340 - Engagement Supervision
NEW QUESTION # 336
Which of the following actions is the most appropriate response for an internal auditor to take when a significant risk is identified during a consulting engagement?
- A. Include the risk identified from the consulting engagement in the next annual risk assessment only if it is part of the consulting engagement objectives.
- B. Report the risk identified from the consulting engagement to senior management.
- C. Do not include the risk in the assessment of risk management processes, as that is management's responsibility.
- D. Do not report the risk, as it is out of scope for the consulting engagement.
Answer: B
Explanation:
When a significant risk is identified during a consulting engagement, the most appropriate response is to report the risk to senior management. Even if the engagement is consulting in nature, it is still crucial for the internal audit activity to ensure that significant risks are communicated to those responsible for managing them.
IIA References:
* IIA Standard 2120: Risk Management requires that internal auditors evaluate the effectiveness of risk management processes and communicate significant risks to senior management. This applies regardless of whether the engagement is assurance or consulting.
* The Practice Guide on Consulting Services advises that internal auditors must ensure that significant risks identified during consulting engagements are brought to the attention of senior management so that they can take appropriate action.
NEW QUESTION # 337
The internal audit manager has been delegated the task of preparing the annual internal audit plan for the forthcoming fiscal year All engagements should be appropriately categorized and presented to the chief audit executive for review Which of the following would most likely be classified as a consulting engagement?
- A. Assessing financial reporting control adequacy
- B. Helping in the design of the risk management program
- C. Reviewing environmental, social, and governance reporting compliance
- D. Evaluating procurement department process effectiveness
Answer: B
NEW QUESTION # 338
Which of the following processes real-transaction data through auditor-developed test programs?
- A. Generalized audit software.
- B. Mapping.
- C. Tracing.
- D. Parallel simulation.
Answer: D
NEW QUESTION # 339
According to the International Professional Practices Framework, which of the following is correct regarding conducting and reporting follow-up activities by the internal audit activity (IAA)?
- A. Due to management changes, the IAA is advised by management that no further work will be done.
Further follow-up work is not required as management has accepted the related risk. - B. In situations where the identified risk may have a significant impact to the business and senior management has accepted the risk, it is not necessary for the CAE to inform the board of the decision.
- C. Management has stopped implementing several key recommendations citing a growing disagreement with their effectiveness. The auditor communicates the situation to the CAE who then escalates the matter to senior management.
- D. A newly appointed auditor immediately proceeds to conduct follow-up testing based on previous work performed for the engagement and then reports the results to the chief audit executive (CAE).
Answer: C
NEW QUESTION # 340
An auditor decides to vouch a sample of ledger entries back to their original documentation. In terms of whether all transactions had been recorded, this test would be:
- A. A more timely test of completeness than evidence from interviews.
- B. Relevant to the completeness objective.
- C. Irrelevant to the completeness objective.
- D. A more biased test of completeness than evidence from interviews.
Answer: C
NEW QUESTION # 341
As a result of server managements assumption of risk there is residual risk that exceeds me organisation's risk appetite. Which of the following actions would be most appropriate for the chief audit executive to take?
- A. ignore the responsibility of addressing the residual risk
- B. Ensure senior management acknowledges residual risk
- C. Assume the responsibility of addressing the residual risk
- D. Communicate with the board the issue of residual risk
Answer: D
Explanation:
The CAE has a responsibility to communicate significant risks to the board, particularly when the residual risk exceeds the organization's risk appetite. By communicating with the board, the CAE ensures that the highest level of governance is aware of the risk and can make informed decisions about how to address it. Ignoring the risk, assuming responsibility without authority, or only ensuring senior management's acknowledgment without further action would be insufficient and not in line with the CAE's duties.
References:
* The Institute of Internal Auditors (IIA) Standards
* Internal Audit's Role in Risk Management
NEW QUESTION # 342
According to IIA guidance, which of the following procedures would be least effective in managing the risk of payroll fraud?
- A. The employee's name listed on organization's payroll is compared to the personnel records.
- B. Payroll time sheets are reviewed and approved by the timekeeper before processing.
- C. Employee access to the payroll database is deactivated immediately upon termination.
- D. Changes to payroll are validated by the personnel department before being processed.
Answer: B
NEW QUESTION # 343
Five brand managers in a consumer products company met to determine how well certain promotions had performed. The data that they needed to analyze consisted of approximately 50 gigabytes of daily point-of-sale (POS) data for each month. The brand managers tried to download the POS data from the mainframe and import it into microcomputer spreadsheets for analysis. Their efforts were unsuccessful, most likely because of:
- A. Error-prone transmission links for downloading the data from the mainframe data files.
- B. The complexity of the mainframe data structure and the large volume of data.
- C. Inconsistencies in the mainframe data due to lack of integrity constraints on the data files.
- D. The difficulty of establishing access privileges for each subset of the mainframe data.
Answer: B
Explanation:
Section: Volume B
NEW QUESTION # 344
Which of the following statements describes an engagement planning best practice?
- A. If the engagement subject matter is not unique, it is not necessary to outline specific testing procedures during the planning phase.
- B. It is best to determine planning activities on a case-by-case basis because they can vary widely from engagement to engagement.
- C. Engagement planning activities include setting engagement objectives that align with audit client's business objectives.
- D. The engagement plan includes the expected distribution of the audit results, which should be kept confidential until the audit report is final.
Answer: C
Explanation:
Best practices for engagement planning involve setting objectives that align with the business objectives of the audit client. This ensures that the audit is relevant and provides valuable insights to the organization.
Planning should also be systematic and documented, ensuring that specific testing procedures and expected outcomes are outlined and communicated. References: = IIA Standard 2200 - Engagement Planning and IIA Practice Guide: "Planning the Engagement".
NEW QUESTION # 345
An internal auditor found that the cost of some material installed on capital projects had been transferred to the inventory account because the capital budget had been exceeded. Which of the following would be an appropriate technique for the auditor to use to determine the extent of the problem?
- A. Identify variances between amounts capitalized each month and the capital budget.
- B. Review all journal entries that transferred costs from capital to inventory accounts.
- C. Compare inventory receipts with debits to the inventory account and investigate discrepancies.
- D. Analyze a sample of capital transactions each quarter to detect instances in which installed material was transferred to inventory.
Answer: B
NEW QUESTION # 346
Which of the following audit steps would an internal auditor perform when reviewing cash disbursements to satisfy IIA guidance on due professional care?
- A. The internal auditor reviews the accounts payable manager's petty cash fund and vouchers
- B. The calculated statistical sample size is 50 however the internal auditor believes errors exist so he decides to increase the sample size to 80
- C. The internal auditor traces serial numbers of computer equipment listed on an invoice to the fixed asset inventory
- D. The internal auditor reviews the related invoice purchase order and receiving report for each sample selection
Answer: D
Explanation:
According to IIA guidance on due professional care, internal auditors should perform thorough and adequate steps to verify the accuracy and legitimacy of transactions. When reviewing cash disbursements, it is essential to check the three-way match among the invoice, purchase order, and receiving report. This ensures that the payment is valid, authorized, and that the goods or services were actually received as ordered. This step is crucial in preventing and detecting errors and fraud, thereby ensuring that the audit findings are reliable and accurate.
Reference:
IIA Standard 1220: Due Professional Care
IIA Practice Guide: Auditing Accounts Payable and Disbursements
NEW QUESTION # 347
Which of the following is a red flag associated with improper asset valuation?
- A. Allowance for bad debts that is increasing in percentage terms.
- B. Recurring positive cash flows from operations.
- C. Unusual increase in gross margin.
- D. Unusual decrease in the number of days' purchases in inventory.
Answer: C
Explanation:
Topic 3, Volume C
NEW QUESTION # 348
Which of the following is the best approach for obtaining feedback from engagement clients regarding the quality of internal audit work?
- A. Ask questions during the exit interviews and send copies of the documented responses to the clients.
- B. Call engagement clients after the exit interviews and send copies of the documented responses to the clients.
- C. Distribute questionnaires to selected engagement clients shortly before preparing the internal audit annual activity report.
- D. Provide questionnaires to engagement clients at the beginning of each engagement and request that the clients complete and return them after the engagements.
Answer: D
NEW QUESTION # 349
According to the Standards, which of the following objectives is not required to ensure the appropriate completion of an engagement?
- A. Providing structured learning opportunities for engagement auditors when and wherever possible.
- B. Determining audit team members are coordinated to ensure the efficient execution of all engagement procedures.
- C. Ensuring all engagement objectives are reviewed for satisfactory achievement and properly documented.
- D. Confirming engagement working papers properly support the observations, recommendations and conclusions.
Answer: A
Explanation:
Topic 4, Volume D
NEW QUESTION # 350
Which of the following would be most helpful to a governmental auditor searching for the existence of multiple welfare claims that were filed under different names but used the same address?
- A. Tagging and tracing.
- B. Generalized audit software.
- C. Spreadsheet analysis.
- D. Integrated test facility.
Answer: B
NEW QUESTION # 351
The chief audit executive of a medium-sized financial institution is evaluating the staffing model of the internal audit activity (IAA). According to IIA guidance, which of the following are the most appropriate strategies to maximize the value of the current IAA resources?
The annual audit plan should include audits that are consistent with the skills of the IAA.
Audits of high-risk areas of the organization should be conducted by internal audit staff.
External resources may be hired to provide subject-matter expertise but should be supervised.
Auditors should develop their skills by being assigned to complex audits for learning opportunities.
- A. 3 and 4 only
- B. 2 and 3 only
- C. 1 and 4 only
- D. 1 and 2 only
Answer: A
NEW QUESTION # 352
During an engagement the internal auditors reported that the organization was paying suppliers without receiving the merchandise. Management responded that it would immediately establish the use of receiving reports. As part of the follow-up activity, which of the following procedures would be the most appropriate in determining that management action was implemented?
- A. Select a sample of receiving reports and determine if payments were made.
- B. Interview warehouse employees to ascertain adherence to new policy.
- C. Ask management if the new policy related to the receiving reports is in place.
- D. Select a sample of payments and determine if a receiving report exists.
Answer: D
NEW QUESTION # 353
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The Institute of Internal Auditors (IIA) is an international professional association that provides education, training, and certification to internal auditors worldwide. One of the most popular certifications offered by the IIA is the Certified Internal Auditor (CIA) designation. To earn this certification, candidates must pass a series of exams that test their knowledge and skills in various areas of internal auditing. One of these exams is the IIA-CIA-Part2, which focuses on the practice of internal auditing.
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