Ultimate Guide to Prepare IIA-CIA-Part2 Certification Exam for Certified Internal in 2021
Use Real IIA-CIA-Part2 Dumps - IIA Correct Answers updated on 2021
NEW QUESTION 238
An internal auditor noticed that employees with responsibilities for cash collection had recently issued an unusually large number of credit memos, indicating that the original charges had been made to the wrong customer accounts. From a control standpoint, the auditor would be concerned with the possibility that:
- A. Employees in this function are concealing a theft of cash collected from customers.
- B. The credit department has not been properly screening customers and, as a result, a large portion of the accounts receivable may not be collectible.
- C. The organization is selling a large number of defective items.
- D. Credit memos are not being submitted on a timely basis.
Answer: A
Explanation:
Section: Volume C
NEW QUESTION 239
The internal audit activity can be involved with systems development continuously, immediately prior to implementation, after implementation, or not at all. An advantage of continuous internal audit involvement compared to the other types of involvement is that:
- A. Redesign costs can be minimized.
- B. There are clearly defined points at which to issue audit comments.
- C. The threat of lack of audit independence can be minimized.
- D. The cost of audit involvement can be minimized.
Answer: A
Explanation:
Section: Volume B
NEW QUESTION 240
An auditor is performing a review of a complex process to identify opportunities to increase efficiency. What is the most practical way to document the process to identify areas of inefficiency?
- A. Create a decision tree.
- B. Flowchart the process.
- C. Develop a PERT (program evaluation and review technique) diagram.
- D. Write a description of the process activities in sequential order.
Answer: B
NEW QUESTION 241
Which of the following trends found on financial reports would most likely indicate a possible problem?
- A. A material increase in the acid-test ratio.
- B. A material increase in daily sales compared to total outstanding receivables.
- C. A material decrease in the receivables turnover.
- D. A material increase in inventory turnover.
Answer: C
Explanation:
Section: Volume A
NEW QUESTION 242
According to the Standards, which of the following best describes what must be agreed upon to establish an understanding with clients prior to starting a consulting engagement?
- A. The engagement objectives, access to clients records, and expectations.
- B. The engagement objectives, scope, respective responsibilities, and other client expectations.
- C. The engagement objectives, scope, and time frame to complete the engagement.
- D. The engagement scope, opportunities for making significant improvements, and client expectations.
Answer: B
NEW QUESTION 243
In order to effectively elicit sensitive information from an employee during an audit engagement, an auditor should:
- A. Explain that the auditor's reputation for integrity, which is vital to the auditor's business success, would be seriously damaged if confidentiality were breached.
- B. Put sensitive questions at the beginning of a questionnaire to ensure that they are answered.
- C. Tell the employee a piece of information obtained from a coworker in a previous interview.
- D. Point out that management has given the auditor full authority to conduct this interview.
Answer: A
NEW QUESTION 244
Which of the following would provide the greatest assurance of the accuracy of a computer program's computation of freight charges for catalog sales?
- A. Use either test data or parallel simulation to test the computer application.
- B. Use difference estimation, selecting transactions from invoices which should have freight charges added to them.
- C. Use discovery sampling, selecting transactions from invoices which should have freight charges added to them.
- D. Use generalized audit software to select a monetary-unit sample of invoices that have been billed to customers.
Answer: A
NEW QUESTION 245
Which of the following items should be addressed in an organization's privacy statement?
I. Intended use of collected information.
II. Data storage and security.
III. Network/infrastructure authentication controls.
IV. Data retention policy of the organization.
Parties authorized to access information.
- A. I and II only
- B. I, II, and V only
- C. II, III, IV, and V only
- D. I and IV only
Answer: B
NEW QUESTION 246
Which of the following statements is false regarding roles and responsibilities pertaining to risk management and control?
- A. Operating managers are responsible for assessing risks and controls in their departments.
- B. The chief audit executive is responsible for overseeing the evaluation risk management and control processes.
- C. Internal auditors provide assurance about risk management and control process effectiveness.
- D. Senior management is charged with overseeing the establishment risk management and control processes.
Answer: B
Explanation:
Section: Volume E
Explanation
NEW QUESTION 247
Once an audit report is drafted, the auditor's supervisor should review it primarily to ensure that all:
- A. Processes within the audited area were reviewed.
- B. Sample sizes appear appropriate for any issues found.
- C. Statements are supported and can be authenticated.
- D. Recommendations for corrective action are clear.
Answer: C
NEW QUESTION 248
According to IIA guidance, which of the following individuals should receive the final audit report on a compliance engagement for the organization's cash disbursements process?
- A. The accounts payable supervisor, controller, and treasurer.
- B. The accounts payable supervisor, accounts payable manager, and controller.
- C. The accounts payable manager, chief financial officer, and audit committee.
- D. The accounts payable manager, purchasing manager, and receiving manager.
Answer: B
Explanation:
Section: Volume E
NEW QUESTION 249
Which of the following would have the least significance in an audit of the efficiency of a driver's license testing facility?
- A. A point-of-sale cashiering system reduces the need to reenter payment data.
- B. Staff are cross-trained to provide backup for other areas of the facility as required.
- C. Clerical staff administer written tests to allow examiners more time to supervise driving tests.
- D. Examiners are required to be recertified on an annual basis.
Answer: D
Explanation:
Section: Volume C
NEW QUESTION 250
Given the scarcity of internal audit resources, a chief audit executive (CAE) decides not to schedule a follow-up of audit recommendations when developing engagement work schedules. Why does the CAE's decision violate the Standards?
- A. When resources are scarce, the follow-up can be incorporated into the next engagement.
- B. Follow-up actions should take priority over new engagements in scheduling.
- C. Lack of resources is not a sufficient reason to forgo a follow-up.
- D. It is not the CAE's responsibility to establish a process for a follow-up.
Answer: C
NEW QUESTION 251
In a payroll audit, a staff auditor suspects that signatures on some of the documents being sampled for examination are not authentic. What action should the auditor take before proceeding with the examination?
- A. Suggest to the payroll manager that the suspicious documents should be sent to the organization's security department for forensic review.
- B. Discuss the suspicious documents with payroll staff to seek their views on the authenticity of the signatures.
- C. Review the suspicious documents with the chief audit executive and seek advice concerning further examination.
- D. Keep the suspicious documents in the workpaper file until the end of the engagement, and then discuss the suspicions with the payroll manager.
Answer: C
NEW QUESTION 252
A consumer electronics company is considering acquiring a small flash memory manufacturer. An internal auditor has been assigned to determine if the manufacturer's accounts payable contain all outstanding liabilities. Which audit procedure is not relevant for this objective?
- A. Send confirmations, including zero-balance accounts, to vendors with whom the manufacturer normally does business.
- B. Verify a sample of accounts payable by using related invoices, receiving reports, and purchase orders.
- C. Verify the period of liability of subsequent cash disbursements using related supporting documentation.
- D. Trace receiving reports issued before the period end to the accounts payable list and vendor invoices.
Answer: B
NEW QUESTION 253
An audit client responded to recommendations from a recent consulting engagement. The client indicated that several recommended process improvements would not be implemented. Which of the following actions should the internal audit activity take in response?
- A. Escalate the unresolved issues to the board, because they could pose significant risk exposures to the organization.
- B. Confirm the decision with management and document this decision in the audit file.
- C. Initiate an assurance engagement on the unresolved issues.
- D. Document the issue in the audit file and follow up until the issues are resolved.
Answer: B
Explanation:
Section: Volume E
NEW QUESTION 254
A manager of one of a retailer's several retail outlets is stealing cash from cash sales, recording the sales as accounts receivable, and subsequently writing off the fictitious accounts receivable as bad debts. Which of the following comparisons would be most effective in signaling the possibility of such a fraud?
- A. Bad debt expense as a percentage of sales, compared to that of the other outlets.
- B. Percentage of past-due accounts receivable, compared to that of previous years.
- C. Bad debt expense as a percentage of sales, compared to that of previous years.
- D. Percentage of past-due accounts receivable, compared to that of the other outlets.
Answer: A
Explanation:
Section: Volume B
NEW QUESTION 255
Which of the following events would most likely cause the chief audit executive to consider changing the current year's audit plan?
1. The government announced that new regulatory requirements will be introduced in the coming years which may significantly impact the organization's primary product.
2. A major competitor unexpectedly introduced a new model at a lower price point to compete with the organization's market leading product.
3. The organization announced a new joint venture with a long time corporate partner to introduce a new product with development costs and sales beginning next fiscal year.
4. An equal joint venture partner filed a lawsuit against the organization and requested that the court issue an immediate suspension of future product shipments.
- A. 3 and 4 only
- B. 1 and 3 only
- C. 2 and 4 only
- D. 1 and 2 only
Answer: C
Explanation:
Section: Volume D
Explanation/Reference:
NEW QUESTION 256
Which of the following situations justifies the release of an interim report to management and the board?
- The internal auditor is convinced that the audit observations require immediate attention. - The internal auditor would like to communicate a change in engagement scope for the activity under review. - The internal auditor notes that the engagement may extend over a longer time period. - The audit supervisor believes that issuing interim reports eases supervisory review and controls over working papers.
- A. 1 and 3 only.
- B. 2 and 3 only.
- C. 2, 3, and 4 only.
- D. 1, 2, and 3 only.
Answer: D
NEW QUESTION 257
An organization has recently incurred significant cost overruns on one of its construction projects. Management suspects that these overruns were caused by the contractor improperly charging for costs related to contract change orders. Which of the following procedures are appropriate for testing this suspicion?
1. Determine if the contractor has received proper approval of change orders from management.
2. Determine if the contractor has billed for original contract work cancelled by the change orders.
3. Determine if the contractor has charged change orders with costs already billed to the original contract.
4. Determine if the contractor has been paid for change orders that have not yet been completed.
- A. 3 and 4 only
- B. 2 and 3 only
- C. 1 and 3 only
- D. 1 and 2 only
Answer: B
NEW QUESTION 258
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