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Q76. A draft internal audit report that cites deficient conditions generally should be reviewed with which of the following groups?
1.
The client manager and her superior.
2.
Anyone who may object to the report’s validity.
3.
Anyone required to take action.
4.
The same individuals who receive the final report.
A. 1 only
B. 1 and 2 only
C. 1, 2, and 3
D. 1, 2, and 4
Answer: C
Q77. Which of the following is an advantage of an interim report?
I.
An interim report provides timely feedback to the audit engagement client.
II.
An interim report provides a mechanism for communicating information on red flags promptly while they are being investigated.
III.
An interim report provides an opportunity for auditor follow-up of findings before the engagement is completed.
IV.
An interim report increases the probability that corrective action will be initiated more quickly.
A. I and IV only
B. II and III only
C. I, III, and IV only
D. I, II, III, and IV.
Answer: C
Q78. If an organization's chief audit executive wants to implement continuous auditing, what is the appropriate order in which key steps should be undertaken?
I. Identify business applications that require access.
II. Implement steps to continuously assess risks and controls.
III. Define objectives of continuous auditing.
IV.
Manage and report results.
A.
III, I, IV, II.
B.
II, I, III, IV.
C.
III, I, II, IV.
D.
II, III, I, IV.
Answer: C
32. In which of the following situations would it be most appropriate to employ the services of a forensic specialist?
A. Detection of unauthorized changes to source documents.
B. Review for misapplication of general computer controls over accounts receivable.
C. Investigation of ghost employees in a large business.
D. Verification of fixed assets in a manufacturing company.
Answer: A
Q79. Which of the following would have the least significance in an audit of the efficiency of a driver's
license testing facility?
A. Clerical staff administer written tests to allow examiners more time to supervise driving tests.
B. Staff are cross-trained to provide backup for other areas of the facility as required.
C. A point-of-sale cashiering system reduces the need to reenter payment data.
D. Examiners are required to be recertified on an annual basis.
Answer: D
Q80. According to IIA guidance, which of the following would not be a consideration for the internal audit activity (IAA) when determining the need to follow-up on recommendations?
A. Degree of effort and cost needed to correct the reported condition.
B. Complexity of the corrective action.
C. Impact that may result should the corrective action fail.
D. Amount of resources required to conduct the follow-up activities.
Answer: D
Q81. Which of the following is a preventive control strategy against fraud?
A. Performing a surprise audit.
B. Maintaining a whistleblower hotline.
C. Implementing control self-assessment.
D. Performing background checks on employees.
Answer: D
Q82. When approving the final engagement report, which of the following is most critical?
A. Opinions are adequately supported.
B. Conclusions are reached for all objectives.
C. Report is distributed to appropriate parties.
D. Report is clear and concise.
Answer: A
Q83. The newly appointed chief audit executive (CAE) of a large multinational corporation, with seasoned internal audit departments located around the world, is reviewing responsibilities for engagement reports. According to IIA guidance, which of the following statements is true?
A. The CAE is required to review, approve, and sign every engagement report.
B. The CAE is required to review, approve, and sign all regulatory compliance engagement reports only
C. The CAE may delegate responsibility for reviewing, approving and signing engagement reports, but should review the reports after they are issued.
D. The internal audit charter must identify authorized signers of engagement reports.
Answer: C
Q84. Which of the following are typical steps in the design of an organization's performance measurement system?
A. Understand organizational strategy; perform a situational assessment; establish measurement categories; and take actions based upon measurement results.
B. Categorize performance measures; establish a data collection plan; analyze data; and predict future performance.
C. Establish a measurement plan; create an organizational strategy linked to those measurements; trend measurement data; and measure data variability.
D. Perform a situational assessment; generate macro measurements; review measurement data; and change strategy based upon measurement results.
Answer: A
Q85. According to IIA guidance,which of the following is true about the supervising internal auditor's review notes?
.
They are discussed with management prior to finalizing the audit.
.
They may be discarded after working papers are amended as appropriate.
.
They are created by the auditor to support her fieldwork in case of questions.
.
They are not required to support observations issued in the audit report.
A.
1 and 3 only
B.
1 and 4 only
C.
2 and 3 only
D.
2 and 4 only
Answer: D
Q86. Management requested the chief audit executive (CAE) to include an audit of the organization's health and safety program in next year's annual audit plan. However, the internal audit department has no expertise in this area. Which of the following would be the most appropriate action by the CAE?
A. With management's agreement, amend the scope of the audit to ensure that areas examined do not require specialized knowledge and expertise.
B. Meet with management to explain that the audit cannot be undertaken and discuss alternative strategies that can be implemented until internal audit can develop its capability in the area.
C. Accept the request provided management has conducted a thorough risk assessment prior to the engagement to help guide the audit.
D. Advise management that compliance audits of this type should only be conducted by the corresponding regulatory agency to ensure independence.
Answer: B
Q87. ORRECT TEXT
A fast-food company is developing a computer simulation involving arrival time at a drive-through restaurant. The distribution for arrival times is:
Time Single-Digit Random Between Arrivals Probability Number Assigned 1 minute
0.1 0 2 minutes
0.2 1, 2 3 minutes
0.3 3, 4, 5 4 minutes
0.4 6, 7, 8, 9
Six random numbers are selected to represent the arrival of six cars: 1, 6, 9, 0, 5, 6. The mean time between arrivals for these cars, in this run of the simulation model, is:
Answer: 1 minute. Answer: 2 minutes. Answer: 3 minutes. Answer: 4 minutes. Answer: C
Q88. Which of the following would provide the best evidence of compliance with an airline's standard of having aircraft refueled and cleaned within a specified time of arrival at an airport?
A. Vendor fuel invoices that have been reconciled to inventory records.
B. Time cards completed by aircraft cleaning and fueling crews.
C. Observation of selected aircraft while they are being refueled and cleaned.
D. Comparison of the standard hourly labor costs for cleaning and fueling personnel with actual
labor charges.
Answer: C
Q89. Which of the following factors would increase the confidence level in a variables sampling plan?
I. A larger sample size.
II. A stratified sample.
III.
A larger standard deviation.
A.
I and II only
B.
I and III only
C.
II and III only
D.
I, II, and III
Answer: A
Q90. Which of the following is the most appropriate step for the chief audit executive to take in order to
avoid defamation of character of the principal suspect in a fraud investigation?
A. Restrict the use of potentially damaging words to privileged reports or discussions.
B. Label all workpapers, reports, and correspondence of the internal audit activity as private.
C. Restrict discussions of the fraud to members of management who express an interest in the
investigation.
D. Destroy all investigation workpapers and reports if the fraud cannot be proven.
Answer: A