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Q241. 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. The complexity of the mainframe data structure and the large volume of data.
B. The difficulty of establishing access privileges for each subset of the mainframe data.
C. Inconsistencies in the mainframe data due to lack of integrity constraints on the data files.
D. Error-prone transmission links for downloading the data from the mainframe data files.
Answer: A
117. After completing a net present value (NPV) calculation on a proposed project, an analyst explores the change in NPV with changes in the interest rate. This additional analysis is referred to as:
A. Decision analysis.
B. Simulation.
C. Sensitivity analysis.
D. Variance analysis.
Answer: C
Q242. Which of the following actions are appropriate for the chief audit executive to perform when
identifying audit resource requirements?
1.
Consider employees from other operational areas as audit resources, to provide additional audit coverage in the organization.
2.
Approach an external service provider to conduct internal audits on certain areas of the
organization, due to a lack of skills in the organization.
3.
Suggest to the audit committee that an audit of technology be deferred until staff can be trained, due to limited IT audit skills among the audit staff.
4.
Communicate to senior management a summary report on the status and adequacy of audit
resources.
A. 1 and 3 only
B. 2 and 4 only
C. 1, 2, and 4
D. 2, 3, and 4
Answer: C
Q243. An audit of a Web-based third-party payment processor determined that a programming error enabled customers to create multiple accounts for each mailing address. This caused problems during the processing of credit card transactions. Management agreed to correct the program and notify customers with multiple accounts that the accounts would be consolidated. What should the auditor do in response?
I. Amend the scope of the subsequent audit to verify that the program was corrected and that accounts were consolidated.
II. Evaluate the adequacy and effectiveness of the corrective action proposed by management.
III. Schedule a follow-up review to verify that the program was corrected and the accounts were consolidated.
IV.
Do nothing because management has agreed to address the problem.
A.
III only
B.
IV only
C.
I and II only
D.
II and III only
Answer: D
Q244. Which of the following factors could interfere with effective problem solving by an internal auditor?
I. Reacting to previous experiences with clients.
II. Focusing only on the most likely cause.
III.
Correcting the symptoms of problems.
A.
I only
B.
III only
C.
I and II only
D.
I, II, and III
Answer: D
Q245. Which of the following is a red flag associated with improper asset valuation?
A. Unusual increase in gross margin.
B. Unusual decrease in the number of days' purchases in inventory.
C. Recurring positive cash flows from operations.
D. Allowance for bad debts that is increasing in percentage terms.
Answer: A
Topic 3, Volume C
Q246. Which of the following risks assumes an absence of compensating controls in the area being reviewed?
A. Control risk.
B. Detection risk.
C. Inherent risk.
D. Sampling risk.
Answer: C
Q247. Which of the following would constitute a violation of the IIA Code of Ethics?
A. An internal auditor, who has recently joined the organization, has accepted an assignment to audit the electronics manufacturing division. The auditor previously served as senior auditor for the external audit of that division and has audited many electronics companies during the past two years.
B. An internal auditor has accepted an assignment to audit the warehousing function six months from now. The auditor has no expertise in that area but has signed up for courses in warehousing that will be completed before the assignment begins.
C. An internal auditor has no ambitions for promotion and has not engaged in training or other professional development activities during the last three years. The auditor's performance assessments indicate consistent quality of work.
D. An internal auditor discovered an internal financial fraud during the year, and the financial statements were adjusted to properly reflect the loss associated with the fraud. The auditor discussed the fraud with the external auditor during the external auditor's review of the working papers detailing the incident.
Answer: C
Q248. An auditor used a questionnaire during an interview to gather information about the nature of credit sales processing. The questionnaire did not cover some pertinent information offered by the person being interviewed, and the auditor did not document the potential problems for further investigation.
The primary deficiency with the above process is that: A. The auditor failed to consider the importance of the information offered.
B. A questionnaire was used in a situation where a structured interview should have been used.
C. Using a questionnaire precludes the auditor from documenting other information.
D. The engagement program was incomplete.
Answer: A
Topic 2, Volume B
Q249. An internal auditor is conducting a review of the procurement function and uncovers a potential conflict of interest between the chief operating officer and a significant supplier of IT software development services. Which of the following actions is most appropriate for the internal auditor to take?
A. Inform the audit supervisor.
B. Investigate the potential conflict of interest.
C. Inform the external auditors of the potential conflict of interest.
D. Disregard the potential conflict, because it is outside the scope of the audit assignment.
Answer: A
Q250. The internal audit activity performs the following sequence of risk management activities: identification, analysis, and evaluation. According to IIA guidance, which of the following assurance approaches does this describe?
A. Process elements approach.
B. Enterprise-wide risk management approach.
C. Key principles approach.
D. Maturity model approach.
Answer: A
Q251. An internal auditor would most likely use attributes sampling when testing which of the following?
A. Accounts receivable balances.
B. Correct coding of accounts payable disbursement vouchers.
C. Year-end inventory value.
D. Fixed asset book value.
Answer: B
Q252. With which of the following would the internal audit activity discuss findings, conclusions and recommendations prior to issuance of internal audit report?
1.
Business unit management.
2.
Chief audit executive.
3.
Audit committee.
4.
Chief executive officer.
A. 1 and 2 only
B. 1 and 3 only
C. 2 and 3 only
D. 1, 2, 3, and 4
Answer: A
Q253. What is the primary factor that determines the depth and breadth of audit follow-up?
A. The engagement client's written response to the audit findings.
B. The auditor's assessment of risk associated with the audit findings.
C. The auditor's assessment of personnel responsible for correcting audit findings.
D. The availability of audit personnel and financial resources.
Answer: B
Q254. In reviewing the appropriateness of the minimum quantity level of inventory established by a department, an auditor would be least likely to consider:
A. Stockout costs, including lost customers.
B. Seasonal variations in forecasting inventory demand.
C. Optimal order sizes determined by an economic order quantity model.
D. The potential for obsolescence of inventory items.
Answer: C
Q255. According to the International Professional Practices Framework, which of the following should be excluded from a final communication for a performance audit engagement?
A. Recommendations and conclusions.
B. The internal auditor's unbiased opinion.
C. Timely and relevant information.
D. Legal opinions related to illegal acts.
Answer: D