Pass4sure 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!
Q1. During an audit of a contract for computer security, a governmental auditor finds that a contractor has developed a system that could be the most advanced in the industry. If it seems that the contractor is charging the government for developmental cost of a system that might be sold to other organizations, what is the auditor's best course of action?
A. Estimate the cost to develop the advanced security system and inform the contractor that it will be a disallowed cost.
B. Exclude the observation from the engagement final communication because the contract was vague and the level of security is clearly acceptable.
C. Estimate the added cost, report it to management, and suggest that management meet with its lawyers and the contractor to resolve differences.
D. Compare the cost of the security program with previous costs incurred by governmental operations and inform the contractor that the difference will be a disallowed cost.
Answer: C
249. 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. The organization is selling a large number of defective items.
B. Employees in this function are concealing a theft of cash collected from customers.
C. Credit memos are not being submitted on a timely basis.
D. The credit department has not been properly screening customers and, as a result, a large portion of the accounts receivable may not be collectible.
Answer: B
Q2. Once an audit report is drafted, the auditor's supervisor should review it primarily to ensure that all:
A. Statements are supported and can be authenticated.
B. Recommendations for corrective action are clear.
C. Processes within the audited area were reviewed.
D. Sample sizes appear appropriate for any issues found.
Answer: A
Q3. If management expects 100 percent compliance with a procedure, which of the following sampling approaches would be most appropriate?
A. Attributes sampling.
B. Discovery sampling.
C. Targeted sampling.
D. Variables sampling.
Answer: B
Q4. According to IIA guidance, which of the following statements best justifies a chief audit executive's request for external consultants to complement internal audit activity (IAA) resources?
A. The organization's audit universe is extensive and diverse.
B. There has been an increase in unanticipated requests for advisory work.
C. Previous work provided by the external service provider has been of great quality and value.
D. A recent benchmarking study found that using external service providers is a common practice of similarly-sized IAAs in other organizations.
Answer: B
Q5. To furnish useful and timely information and promote improvements in operations, internal auditors should provide:
A. Senior management with reports that emphasize the operational details of defective conditions.
B. Operating management with reports that emphasize general concerns and risks.
C. Information in written form before it is discussed with the engagement client.
D. Reports that meet the expectations of both operational and senior management.
Answer: D
Q6. Which of the following statements is correct regarding the assessment of risk in the annual audit planning process?
1.
Activities requested by management should be considered higher risk than those requested by the audit committee.
2.
Activities with lower budgets can be as high risk as those with higher budgets.
3.
The potential financial or adverse exposure should always be considered in the assessment of risk.
A. 1 only
B. 2 only
C. 3 only
D. 2 and 3 only
Answer: D
Q7. An audit of a company's accounts payable found that the individuals responsible for maintaining the vendor master file could also enter vendor invoices into the accounts payable system. During the exit conference, management agreed to correct this problem. When performing a follow-up engagement of accounts payable, the auditor should expect to find that management has:
A. Transferred the individuals who maintained the vendor master file to another department to ensure that responsibilities are appropriately segregated.
B. Compared the vendor and employee master files to determine if any unauthorized vendors have been added to the vendor master file.
C. Changed the access control system to prevent employees from both entering invoices and approving payments.
D. Modified the accounts payable system to prevent individuals who maintain the vendor master file from entering invoices.
Answer: D
Q8. Given the scarcity of internal audit resources, a chief audit executive (CAE) decided not to
schedule a follow-up of audit recommendations when developing engagement work schedules. Does the CAE’s decision violate the Standards?
A. No, because the Standards do not specify whether follow-up is needed.
B. No, because when there is evidence of sufficient motivation by the client, there is no need for follow-up action.
C. Yes, because scarcity of resources is not a sufficient reason to omit follow-up action.
D. Yes, because the Standards require the auditors to determine whether the client has appropriately implemented all of the auditor's recommendations.
Answer: C
Q9. Which of the following conditions is the strongest indicator of possible fraud?
A. An assistant treasurer who refuses to take vacations.
B. Independent reconciliations of subsidiary to general ledgers that are not always completed on a timely basis.
C. A condition of excess manufacturing waste material.
D. A manager who is often over budget at the end of a reporting period.
Answer: A
Q10. When establishing the internal audit activity's annual plan, which of the following would be the best source of potential audit engagement topics?
A. The organization's budget.
B. Operations involving cash transactions.
C. Recent changes in management objectives.
D. Risk factors utilized in the organization's risk models.
Answer: C
Q11. 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.
1 and 2 only
B.
1 and 4 only
C.
2 and 3 only
D.
3 and 4 only
Answer: D
424. It is close to the fiscal year end for a government agency, and the chief audit executive (CAE) has the following items to submit to either the board or the chief executive officer (CEO) for approval. According to IIA guidance, which of the following items should be submitted only to the CEO?
A. The internal audit risk assessment and audit plan for the next fiscal year.
B. The internal audit budget and resource plan for the coming fiscal year.
C. A request for an increase of the CAE's salary for the next fiscal year. D. The evaluation and compensation of the internal audit team.
Answer: D
Q12. According to IIA guidance, which of the following statements are true regarding the internal audit
plan?
1.
The audit plan is based on an assessment of risks to the organization.
2.
The audit plan is designed to determine the effectiveness of the organization's risk management process.
3.
The audit plan is developed by senior management of the organization.
4.
The audit plan is aligned with the organization's goals.
A. 1 and 2 only
B. 3 and 4 only
C. 1, 2, and 4
D. 1, 3, and 4
Answer: C
Q13. When establishing a quality assurance and improvement program, the chief audit executive should ensure the program is designed to accomplish which of the following objectives?
1.
Add value.
2.
Improve operations.
3.
Provide assurance that the internal audit activity conforms with the Standards.
4.
Provide assurance that the internal audit activity conforms with the IIA Code of Ethics.
A. 1 only
B. 1 and 2 only
C. 1 and 3 only
D. 1, 2, 3, and 4
Answer: D
Q14. A company owns a machine that will produce 100 light switches in four hours. Due to increased demand, a second machine capable of producing 100 light switches in three hours has been added.
Approximately how many hours will it take to produce 100 light switches using both machines working together?
A. 7.0
B. 3.5
C. 1.7
D. 0.58
Answer: C
Q15. The chief audit executive (CAE) of a large retail operation believes that senior management has accepted a level of risk that exceeds the organization's current risk tolerance with respect to a major expansion. The CAE plans to meet with senior management to discuss these concerns. According to IIA guidance, which of the following would be an appropriate course of action in preparation for this meeting?
.
Understand management's basis for the decision.
.
Advise the board of the concern and upcoming meeting.
.
Ascertain which members of management have accepted the risk.
.
Determine if management has the authority to accept the risk.
A.
1 and 2 only
B.
1 and 4 only
C.
2 and 3 only
D.
3 and 4 only
Answer: B