Free IIA-CIA-PART2 Exam Dumps Preview

When gathering information as a part of a preliminary survey, what is a mandatory step internal auditors must take?

An organization must prepare and report critical loan information to the government. The report contains 121 data fields for each loan, and the final report must have an error rate of less than 5%. Internal auditors reviewed half of the loan portfolio and discovered that the error rate was greater than 50% due to errors in two data fields on each loan.

What is the most appropriate next step for the audit team?

Why should internal audit workpapers be presented in a consistent format?

Management and internal audit are discussing possible solutions to address the organization's insufficient petty cash.

Which action would most effectively and efficiently mitigate the risk?

Which of the following procedures would be most helpful in providing additional evidence when an auditor suspects that an unidentified employee is submitting and approving invoices for payment?

While performing an audit of the human resources department, an internal auditor discovered unencrypted files containing the personal information of employees stored on a public shared drive.
According to IIA guidance, which of the following actions by the auditor would be the most appropriate?

Which of the following is a justifiable reason for omitting advance client notice when planning an audit engagement?

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?

After partially completing an internal control review of the accounts payable department, an auditor suspects that some type of fraud has occurred. To ascertain whether the fraud is present, the best sampling approach would be to use.

Why would an internal auditor use a spaghetti map when reviewing the physical ow of materials through a manufacturing and distribution facility?

An internal control questionnaire would be most appropriate in which of the following situations?

An internal auditor is using computer-assisted audit techniques to examine employee expenses across several divisions of the organization.

Which of the following is true in this situation?

The final internal audit report should be distributed to which of the following individuals?

An organization's board would like to establish a formal risk management function and has asked the chief audit executive (CAE) to be involved in the process.
According to IIA guidance, which of the following roles should the CAE not undertake?

An internal auditor is assigned to conduct an audit of security for a local area network (LAN) in the finance department of the organization. Investment decisions, including the use of hedging strategies and financial derivatives, use data and financial models which run on the LAN. The LAN is also used to download data from the mainframe to assist in decisions.

Which of the following should be considered outside the scope of this security audit engagement?

Which of the following statements is true regarding the use of internal control questionnaires (ICQs)?

During an audit engagement, the internal auditor discovered that physical security of the data center did not meet the organization's established requirements. The chief information security officer stated he would implement new procedures to minimize security threats by the end of the quarter.

Which of the following would be the best way to follow up on the audit finding?

Which of the following engagement supervision activities should be performedfirst?

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?

During an assurance engagement, an internal auditor discovered that a sales manager approved numerous sales contracts for values exceeding his authorization limit. The auditor reported the finding to the audit supervisor, noting that the sales manager had additional new contracts under negotiation.
According to IIA guidance, which of the following would be the most appropriate next step?

A checklist questionnaire would yield the most useful results for which of the following audit engagements?

When reviewing vendor management controls in the organization's accounts payable system, the internal auditor discovered inappropriate payments.

Which of the following best describes a condition attribute the auditor may reference to communicate her observation?

Which of the following should be the focus of the effect section of the preliminary observations document?

The final engagement communication contains the following observation:

"The internal auditor discovered that three of the 10 contracts reviewed failed to meet the organization's competitive bidding requirements. Management explained that senior management deemed these purchases to be critical and awarded them as sole-source."

Which of the following components is missing in the documentation of the observation?

A key to effective benchmarking in a consulting engagement is identifying the issues that can be:

An internal auditor has been assigned to perform a quality audit on a manufacturing plant.

Which course of action should the auditor perform first?

Which of the following is typically not a reason for committing financial statement fraud?

Which of the following statements is true regarding the communication of audit engagement observations?

According to IIA guidance, which of the following statements about analytical procedures is true?

Which of the following is an appropriate activity when supervising engagements?

According to IIA guidance, which of the following is most important for the internal audit activity to evaluate regarding management's remediation plans to address audit findings?

Which of the following is the best example of an audit engagement supervision activity?

A newly promoted chief audit executive (CAE) is faced with a backlog of assurance engagement reports to review for approval. In an attempt to attach a priority for this review, the CAE scans the opinion statement on each report. According to IIA guidance, which of the following opinions would receive the lowest review priority?
1. Graded positive opinion.
2. Negative assurance opinion.
3. Limited assurance opinion.
4. Third-party opinion.

According to IIA guidance, which of the following statements is false regarding a review of the controls in place to prevent fraud?

Which of the following would most likely prompt special notification from the chief audit executive to senior management?

Which of the following statements is generally true regarding audit engagement planning?

Which of the following would be an appropriate role of the internal audit function?

According to IIA guidance, which of the following accurately describes the responsibilities of the chief audit executive with respect to the final audit report?
1. Coordinate post-engagement conferences to discuss the final audit report with management.

2. Include management's responses in the final audit report.
3. Review and approve the final audit report.
4. Determine who will receive the final audit report.

The most effective way for internal auditors to enhance the reliability of computerized financial and operating information is by:

The internal audit activity of an organization obtained approval to add a senior auditor to its staff. The chief audit executive, audit manager, and audit supervisor each will interview the candidates.
According to the Standards, which of the following best explains the involvement of management in the interview process?

When forming an opinion on the adequacy of management's systems of internal control, which of the following findings would provide the most reliable assurance to the chief audit executive? During an audit of the hiring process in a law firm, it was discovered that potential employees' credentials were not always Confirmed sufficiently. This process remained unchanged at the following audit. During an audit of the accounts payable department, auditors calculated that two percent of accounts were paid past due. This condition persisted at a follow up audit. During an audit of the vehicle fleet of a rental agency, it was determined that at any given time, eight percent of the vehicles were not operational. During the next audit, this figure had increased. During an audit of the cash handling process in a casino, internal audit discovered control defficiencies in the transfer process between the slot machines and the cash counting area. It was corrected immediately.

Which of the following statements is not true about the oversight and review of working papers by the chief audit executive (CAE)?

Which of the following describes the appropriate level of communication with management of the area under review during an audit engagement?

The chief audit executive is completing the audit plan.
According to IIA guidance, which of the following is the best method of selecting the audits to be completed?

During an operational audit of a chain of pizza delivery stores, an auditor determined that cold pizzas were causing customer dissatisfaction. A review of oven calibration records for the last six months revealed that adjustments were made on over 40 percent of the ovens. Based on this, the auditor:

An internal auditor performed a high-level review of financial information, governance, risk management, and controls of a local marketing firm as part of the purchase decision process.

What type of engagement did the auditor perform?

According to the Standards, which of the following objectives is not required to ensure the appropriate completion of an engagement?

Company A has a formal comprehensive corporate code of ethics while company B does not.

Which of the following statements regarding the existence of the code of ethics in company A can be logically inferred?
I. Company A exhibits a higher standard of ethical behavior than does company B.
II. Company A has established objective criteria by which an employee's actions can be evaluated.
III. The absence of a formal corporate code of ethics in company B would prevent a successful audit of ethical behavior in that company.

The internal audit activity noted there were minimal controls in place over the petty cash fund.

Which of the following recommendations would be the most appropriate?

Which information-gathering method would be most efficient for an internal auditor to determine whether specified control procedures are in place?

Which of the following is critical to the success of an effective interview?

During an engagement the internal auditors reported that the organization was paying suppliers without receiving the merchandise. Management responded that it would immediately establish the use of receiving reports.
As part of the follow-up activity, which of the following procedures would be the most appropriate in determining that management action was implemented?

An internal auditor interviewed the head of security as part of an engagement to assess the safeguarding of sensitive equipment at facilities. Based on this interview, the auditor concluded that the facilities had adequate security measures in place to safeguard the sensitive equipment.

Which of the following actions should the auditor have taken to meet the engagement objective?

Which of the following is characteristic of a qualitative metric rather than a quantitative measure?

Which of the following situations would best support the decision of a chief audit executive (CAE) to defer follow-up activity at a branch office until the next audit engagement?

The most common motivation for management fraud is the existence of:

An organization's healthcare insurance costs have been rising approximately 10 percent per year for several years.

Which of the following analytical review procedures would best evaluate the reasonableness of the increase in healthcare costs?

The chief audit executive (CAE) notes that management has adopted the option of not taking action on an audit issue involving a sizeable risk which has been accepted in the past.

Which would be an appropriate action by the CAE?

If an auditor used nonstatistical sampling instead of statistical sampling to estimate the value of inventory, which of the following would be true?

An internal auditor is analyzing sales records and is concerned whether a transaction is recorded in the correct period. The accounting manager explains that the external auditor approved the records, and produces an email from the external audit team leader.

How should the internal auditor respond?

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.

An internal auditor was reviewing the procurement department's tender documentation for completeness.
He documented all discrepancies, but the procurement manager disagreed with his findings. Upon further review, the internal auditor noted that all discrepancies had been corrected in the tender database.

Which of the following courses of action would have prevented this situation?

Which of the following best defines an engagement conclusion?

An organization's internal audit plan includes a recurring assurance review of the human resources (HR) department. Which of the following statements is true regarding preliminary communication between the auditor in charge (AIC) and the HR department?
1. The AIC should notify HR management when the draft audit plan is being developed, as a courtesy.
2. The AIC should notify HR management before the planning stage begins.
3. The AIC should schedule formal status meetings with HR management at the start of the engagement.
4. The AIC should finalize the scope of the engagement before communicating with HR management.

According to the Standards, which of the following should be the basis for scheduling follow-up of engagement recommendations?

At the conclusion of an audit of an organization's treasury department, a report was issued to the treasurer, chief financial officer, president, and board. Because of the sensitivity of some findings, a follow-up review was performed. The auditor should provide the report of follow-up findings to the:

I. Treasurer.
II. Chief financial officer.
III. President.
IV. Board.

A manufacturer is under contract to produce and deliver a number of aircraft to a major airline. As part of the contract, the manufacturer is also providing training to the airline's pilots. At the time of the audit, the delivery of the aircraft had fallen substantially behind schedule while the training had already been completed.
If half of the aircraft under contract have been delivered, which of the following should the internal auditor expect to be accounted for in the general ledger?

A governmental auditor was assigned to determine reasons why the students in one region scored significantly higher on education evaluation tests than did the students in another region. Previous research showed that there is a direct correlation between public Financial support and student results.

Which of the following is most likely to explain the difference in the regional results?

Besides a chief audit executive's professional experience, what determines the frequency and approach to assessing residual risk?

An internal auditor noticed that employees responsible for the warehouse do not record movements of goods in a timely fashion and do not seem to consider this activity as a priority.

Which of the following techniques would help the auditor understand the causes behind their perspective?

During a review of the organization's waste management processes, the internal auditor discovered that wastewater is being disposed of inappropriately. The auditor's recommendations, suggested to mitigate the risk of regulatory sanctions and reputational damages, were accepted and timelines for implementation were agreed. However, during the internal audit activity's periodic follow-up exercise, management indicated that the recommendation was too expensive to implement and the current disposal method has been cost-effective.

What should the chief audit executive do in this case?

According to IIA guidance, which of the following is most likely to become part of the engagement work program?

An internal audit activity is planning itsfirst audit of IT shared services.

Which of the following controls would typically be evaluatedfirst?

Which of the following external risks should be included when organizing the risk universe if unhappy customers can easily share their complaints with other existing and potential customers?

According to IIA guidance, which of the following statements is true regarding an engagement supervisor's use of review notes?

The best method for assessing the relative importance of risk factors is to:

An internal auditor would most likely use attributes sampling when testing which of the following?

Which of the following types of internal audit consulting engagements is an example of a facilitation service?
I. Conducting control self-assessment workshops.
II. Participating on standing committees.
III. eviewing regulatory compliance.
IV. Benchmarking.
V. Estimating savings from outsourcing processes.

A chief audit executive (CAE) has decided to add an engagement to the current audit plan which will exceed available audit resources.

Which of the following is the best course of action for the CAE to take?

An internal auditor for a large telecommunications organization identified potential risk factors related to a planned billing system conversion.

Which of the following risk factors would present the least potential exposure to the organization?

According to the IIA guidance, which of the following does the engagement work program test in a review of an organizational process?

Which of the following is an appropriate documentation of proper engagement supervision?

Which of the following is the most appropriate approach for the internal audit activity to follow up on management action plans?

After the team member who specialized in fraud investigations left the internal audit team, the chief audit executive decided to outsource fraud investigations to a third party service provider on an as needed basis.

Which of the following is most likely to be a disadvantage of this outsourcing decision?

Which of the following actions has the least influence on the chief audit executive's development of an audit plan?

If participants in a control self-assessment workshop begin breaking their agreed-upon ground rules, the facilitator should:

A chief audit executive (CAE) suspects that several employees have used desktop computers for personal gain. In conducting an investigation, the primary reason that the CAE would choose to engage a forensic information systems auditor rather than using the organization's information systems auditor is that a forensic information systems auditor would possess:

Which of the following would help the internal audit activity assess compliance with the organization's standard operating procedures for bank deposits during a preliminary survey?

An engagement team is being assembled to audit of one of the organization's vendors.

Which of the following statements best applies to this scenario?

An organization buys crude oil on the open market and refines it into a high-quality gasoline. The price of crude oil is extremely volatile.

Which of the following is the most appropriate risk management technique to protect the organization against these price fluctuations?

Which of the following examples would an internal auditor consider the least reliable form of evidence?

During the planning phase of an audit of the treasury function, an internal auditor conducted a risk assessment of the function in order to:

In reviewing the appropriateness of the minimum quantity level of inventory established by a department, an auditor would be least likely to consider:

Which of the following best describes why an internal audit activity would consider sending written preliminary observations to the audit client?

According to the Standards, which of the following is true regarding the auditor's inclusion of management's satisfactory performance in the final audit report?

Which of the following data sources would provide the least valid data for an audit of a retail store's customer service?

An internal auditor is discussing an audit problem with an engagement client. While listening to the client, the internal auditor should:

An internal audit activity plans its engagements based on an organization-wide risk assessment.
According to IIA guidance, which of the following statements is true regarding the required frequency of the risk assessment?

Which document should the internal audit activity prepare during an assurance engagement to document the audit procedures of identifying, analyzing, evaluating, and obtaining information during the engagement?

An internal audit activity is performing an assurance engagement of a shipping organization's billing process. During the early stages of the engagement, the internal audit activity identifies potential high-risk defficiencies in billing transactions with certain vendors. The internal audit activity believes these defficiencies should be communicated to senior management.

Which of the following would the internal audit activity include in its preliminary communication to senior management?