Testking offers free demo for IIA-CIA-Part2 exam. "Certified Internal Auditor - Part 2, Conducting the Internal Audit Engagement", also known as IIA-CIA-Part2 exam, is a IIA Certification. This set of posts, Passing the IIA IIA-CIA-Part2 exam, will help you answer those questions. The IIA-CIA-Part2 Questions & Answers covers all the knowledge points of the real exam. 100% real IIA IIA-CIA-Part2 exams and revised by experts!
Q106. An auditor for a major retail company suspects that inventory fraud is occurring at three stores which have high costs of goods sold. Which of the following audit activities would provide the most persuasive evidence that fraud is occurring?
A. Use an integrated test facility (ITF) to compare individual sales transactions with test transactions submitted through the ITF and investigate all differences.
B. Interview the three individual store managers to determine if their explanations about the observed differences are the same, and then compare their explanations to that of the section manager.
C. Schedule a surprise inventory audit to include a physical inventory and investigate areas of inventory shrinkage.
D. Select a sample of individual store prices and compare them with the sales entered on the cash register for the same items.
Answer: C
Q107. An internal audit activity implemented an integrated test facility to test payroll processing. The auditors identified the key controls and processing steps built into the computer program and developed test data to test them. The auditors submitted test transactions throughout the year and did not find any differences in their test results. The auditors can conclude that:
A. The system is properly capturing the hours worked by employees during the year and the hours have been properly submitted to payroll and processed correctly.
B. All employees were correctly paid during the year and their pay was correctly computed.
C. The computer application and its control procedures were processing payroll transactions correctly during the past year.
D. All of the above.
Answer: C
Q108. The chief audit executive (CAE) of a multinational entity with highly automated and complex operations has just completed the update of the risk-based audit plan. Interviews with management revealed the introduction of new technology and a significant increase in both the number and severity of technology-based risk exposures. According to the International Professional Practices Framework, which of the following would be the best course of action for the CAE to undertake next?
A. Develop a detailed audit plan that makes the most efficient use and reallocation of existing internal audit resources.
B. Arrange for the outsourcing of some technology intensive audit processes and procedures based on the plan changes.
C. Evaluate whether appropriate skills and knowledge required to perform the necessary audit work currently exist in the department.
D. Begin planning to recruit information technology audit specialists and other expert personnel into the internal audit activity.
Answer: C
Q109. Which of the following best defines an engagement conclusion?
A. An auditor's determination of the cause of an engagement observation.
B. An auditor's professional judgment of the situation which was reviewed.
C. An opinion that must be included in the engagement final communication.
D. A recommendation for corrective action.
Answer: B
Q110. Which of the following is typically not a reason for committing financial statement fraud?
A. To dispel negative market perception.
B. To disguise a duplicate payment to a vendor.
C. To obtain more favorable terms on financing.
D. To receive performance-related bonuses.
Answer: B
Q111. Which of the following would most likely include recommendations for process improvements?
.
Due diligence engagement.
.
Forensic investigation.
.
Internal audit engagement.
.
Consulting engagement.
A.
1, 2, and 3 only
B.
1, 2, and 4 only
C.
1, 3, and 4 only
D.
2, 3, and 4 only
Answer: D
Q112. According to the International Professional Practices Framework, which of the following statements is true regarding the use of the statement, "Conducted in Conformance with the International Standards for the Professional Practice of Internal Auditing," when communicating results of a seven-year-old internal audit activity?
A. The statement may be used only when conducting international engagements.
B. The statement may be used only if the results of the quality assurance and improvement program support the statement.
C. The statement may be used whether or not the internal audit department has an external quality assessment review or an independent validation of a self assessment.
D. The statement should not be used for a consulting engagement.
Answer: B
Q113. Which of the following would be included in an internal audit department's quality assurance and improvement program?
1.
Ongoing internal assessments of the performance of the internal audit department.
2.
Periodic internal reviews through self-assessments.
3.
Assessments conducted by a qualified external reviewer at least once every five years.
A. 1 only
B. 1 and 2 only
C. 2 and 3 only
D. 1, 2, and 3
Answer: D
Q114. According to IIA guidance, organizations have the most influence on which element of fraud?
A. Opportunity.
B. Rationalization.
C. Pressure.
D. Incentives.
Answer: A
407. The external auditor has identified a number of production process control deficiencies involving several departments. As a result, senior management has asked the internal audit activity to complete internal control training for all related staff. According to IIA guidance, which of the following would be the most appropriate course of action for the chief audit executive to follow?
A. Refuse to accept the consulting engagement because it would be a violation of independence.
B. Collaborate with the external auditor to ensure the most efficient use of resources.
C. Accept the engagement but hire an external training specialist to provide the necessary expertise.
D. Accept the engagement even if the audit engagement staff was previously responsible for operational areas being trained.
Answer: D
Q115. Which sampling plan requires no additional sampling once the first error is found?
A. Stratified sampling. B. Attributes sampling. C. Stop-or-go sampling. D. Discovery sampling.
Answer: D
Q116. In addition to the internal auditor, which of the following parties should be present at an exit or closing conference?
1.
Audit committee members.
2.
The external auditor.
3.
The management responsible for the areas covered by the engagement.
4.
The chief executive officer.
A. 2 only
B. 3 only
C. 3 and 4 only
D. 1, 3, and 4 only
Answer: B
Q117. An internal auditor is discussing an audit problem with an engagement client. While listening to the client, the internal auditor should:
A. Prepare a response to the client.
B. Take mental notes on the speaker's nonverbal communication, as it is more important than what is being said.
C. Make sure that all details, as well as the main ideas of the client, are remembered.
D. Integrate the incoming information from the client with information that is already known.
Answer: D
Q118. In advance of a preliminary survey, a chief audit executive sends a memorandum and questionnaire to the supervisors of the department to be audited. What is the most likely result of that procedure?
A. It creates apprehension about the audit engagement.
B. It involves the engagement client's supervisory personnel in the audit.
C. It is an uneconomical approach to obtaining information.
D. It is only useful for audits of distant locations.
Answer: B
Q119. The chief audit executive (CAE) manages a large internal audit activity (IAA) reporting functionally to the audit committee and administratively to the chief risk officer. During the CAE's recent unplanned medical leave, several internal audit reports were completed and waiting for CAE approval, however, no formal delegation of authority was in place to anticipate this situation. In order to preserve the independence of the IAA, which of the following would be the most appropriate individual to review and approve these reports during the CAE's absence?
A. External auditor.
B. Chief risk officer.
C. Engagement lead auditor.
D. Audit committee chair.
Answer: C
Q120. Which of the following statements about internal audit's follow-up process is true?
A. The nature, timing, and extent of follow-up for assurance engagements is standardized to ensure quality performance.
B. The actions of external auditors and other external assurance providers is not encompassed by internal audit's follow-up process.
C. Internal auditors have responsibility for determining if management and the board have implemented the recommended action or otherwise accepted the risk.
D. The follow-up process must be complete and documented in the working papers in order to conclude the engagement.
Answer: C