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Pass IIA-CIA-Part2 Exam with 360 Questions - Verified By Exams-boost
IIA-CIA-Part2 exam is designed for internal auditors who have a minimum of 24 months of experience in internal auditing or a related field. It is also recommended that candidates have completed the IIA-CIA-Part1 exam before taking the IIA-CIA-Part2 exam. IIA-CIA-Part2 exam consists of 100 multiple-choice questions and is administered in a computer-based format. Candidates have 2.5 hours to complete the exam.
NEW QUESTION # 30
Which of the following best describes the primary concern of the audit manager upon review of engagement working papers of an auditor?
- A. To ensure that the audit programs are followed by the auditor.
- B. To ensure that as part of the documentation the auditor collected original documents that can corroborate the audit findings.
- C. To ensure that the work papers create background for subsequent reviews.
- D. To ensure adequate control over the custody of working papers is exercised by the auditor.
Answer: A
NEW QUESTION # 31
Which of the following is an effective approach for internal auditors to take to improve collaboration with audit clients during an engagement?
1. Obtain control concerns from the client before the audit begins so the internal auditor can tailor the scope accordingly.
2. Discuss the engagement plan with the client so the client can understand the reasoning behind the approach.
3. Review test criteria and procedures where the client expresses concerns about the type of tests to be conducted.
4. Provide all observations at the end of the audit to ensure the client is in agreement with the facts before publishing the report.
- A. 1 and 2 only
- B. 1 and 4 only
- C. 3 and 4 only
- D. 2 and 3 only
Answer: A
Explanation:
Section: Volume E
NEW QUESTION # 32
In the following risk control map risks have been categorized based on the level of significance and the associated level of control. Which of the following statements is true regarding Risk C?
- A. The level of control is excessive given the level of risk
- B. The level of control is appropriate given the level of risk
- C. The level of control is inadequate given the level of risk
- D. There is not enough of information to determine whether the controls are appropriate or not
Answer: C
NEW QUESTION # 33
When developing the scope of an audit engagement, which of the following would the internal auditor typically not need to consider?
- A. The expected outcomes and deliverables.
- B. The operational and geographic boundaries.
- C. The need and availability of automated support.
- D. The potential impact of key risks.
Answer: D
NEW QUESTION # 34
An internal auditor is evaluating controls over the purchasing function. The function includes the material control department, the purchasing department, and the receiving department. Which of the following is true regarding the presentation of the process flow among the three departments?
- A. Both a flowchart and narratives are needed due to the number of departments involved.
- B. A horizontal flowchart, with the departments described across the top and the process flowing horizontally, would be most useful.
- C. Flowcharts are not useful for documenting process flow.
- D. A vertical flowchart of each department, showing inputs at the top and outputs at the bottom, would be most useful.
Answer: B
Explanation:
Section: Volume B
NEW QUESTION # 35
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 4 only
- B. 2 and 3 only
- C. 1 and 3 only
- D. 2 and 4 only
Answer: D
NEW QUESTION # 36
An audit observation noted that annual inventory counts of biofuel was not being performed appropriately Fuel yards were not visited and physical amounts of biofuel were not reconciled with accounting data Management of the division understood the issue and promised to resolve the problem When should the internal auditor schedule a follow-up review?
- A. Before financial year end
- B. As soon as possible, no later than two months after the audit
- C. When convenient for both parties
- D. When management has indicated that the issue has been resolved
Answer: D
NEW QUESTION # 37
Which of the following is an effective way for an internal auditor to improve communications with the client during a contentious audit?
- A. Clearly explain to the client the role of the internal audit activity in the change process.
- B. Obtain the support of the board of directors for proposed changes before discussing the changes with operating management.
- C. Speak privately with key client personnel immediately after proposed changes are announced to address their concerns.
- D. Encourage the client to participate as a partner in the decision-making process to determine the changes that need to be made.
Answer: D
NEW QUESTION # 38
An internal auditor has a recommendation to change operations which could potentially increase profits by $50,000. The best way to sell this recommendation to management is to:
- A. Wait until the exit conference to discuss it in order to ensure all affected parties are present.
- B. Bring it to the audit manager, who should bring it immediately to senior management's attention.
- C. Discuss it with operating supervisors who are directly affected by the change, and then with department management.
- D. Carefully work out the details of implementation before presenting it to department management.
Answer: C
NEW QUESTION # 39
An internal auditor examined a nostatistical sample of open accounts receivable balances and discovered that 10 out of 60 exceeded the approved unseated credit limit threshold defined by the organization's policy What should the auditor document in the workpapers?
- A. Credit limit over drafts are not monitored in accordance with the organizations policy
- B. Management should perform monthly monitoring of open customer balances
- C. Seventeen percent of customers' open balances in the sample exceed their approved unsecured credit rent
- D. The threshold for credit limits defined by the organization's policy is not adequate
Answer: A
NEW QUESTION # 40
The chief audit executive (CAE) determined that based on management's oral response, the action taken regarding an audit observation was sufficient when weighted against the relative importance of the audit recommendation. Which of the following is the most appropriate step for the internal auditor to take next?
- A. Initiate a follow-up audit to ensure that action has really been taken.
- B. Escalate the issue to the board and get their position on the issue.
- C. Note in the permanent file that follow-up needs to be performed as part of the next engagement.
- D. Follow-up with management until a written response is obtained.
Answer: C
Explanation:
Section: Volume A
NEW QUESTION # 41
According to IIA guidance, which of the following activities is most likely to enhance stakeholders' perception of the value the internal audit activity (IAA) adds to the organization?
1. The IAA uses computer-assisted audit techniques and IT applications.
2. The IAA uses a consistent risk-based approach in both its planning and engagement execution.
3. The IAA demonstrates the ability to build strong and constructive relationships with audit clients.
4. The IAA frequently is involved in various project teams and task forces in an advisory capacity.
- A. 2 and 4
- B. 1 and 2
- C. 3 and 4
- D. 1 and 3
Answer: C
NEW QUESTION # 42
Persuasive evidence indicates that a member of senior management has been involved in insider trading that would be considered fraudulent. However, the evidence was encountered during an operational audit and is not considered relevant to the audit. Which of the following is the most appropriate action for the chief audit executive to take?
- A. Report the evidence to external legal counsel for investigation. Report the legal counsel findings to management.
- B. Discontinue audit work associated with the insider trading since it is not relevant to the existing audit.
- C. Report the evidence to the chairperson of the audit committee and recommend an investigation.
- D. Conduct sufficient audit work to conclude whether fraudulent activity has taken place, then report the findings to the chairperson of the audit committee and to government officials if appropriate action is not taken.
Answer: C
NEW QUESTION # 43
A performance audit engagement typically involves:
- A. Review of financial statement information, including the appropriateness of various accounting treatments.
- B. Appraisal of the environment and comparison against established criteria.
- C. Tests of compliance with policies, procedures, laws, and regulations.
- D. Evaluation of organizational and departmental structures, including assessments of process flows.
Answer: B
Explanation:
Section: Volume B
NEW QUESTION # 44
Why should internal auditors develop a strong relationship with the external auditors?
- A. External auditors can share information gained from work with similar clients.
- B. External auditors can help improve the effectiveness of internal control sampling techniques.
- C. External auditors offer an additional layer of approval to internal auditors' reports.
- D. External auditors can offer an independent and knowledgeable viewpoint.
Answer: D
NEW QUESTION # 45
A bank uses a risk analysis matrix to quantify the relative risk of auditable entities. The analysis involves rating auditable entities on risk factors using a scale of 1 to 10, with 10 representing the greatest risk. A partial list of risk factors and the ratings given to three of the bank's departments is provided below:
Which of the following statements regarding risk in the department is true?
- A. The relative ranking of the departments in order of their risk, from greatest to least risk, is: A; C; B.
- B. The internal audit activity should schedule audits of department B more often than audits of department C because of the relative control strength of department C as compared to department B.
- C. The nature of department A's control structure may be justified by the nature of the department's assets and the complexity of its transactions.
- D. As compared to departments A and C, department B has a stronger control system to compensate for the greater complexity of the department's transactions and dollar value of its assets.
Answer: C
Explanation:
Section: Volume C
Explanation/Reference:
NEW QUESTION # 46
Which of the following situations justifies the release of an interim report to management and the board?
* The internal auditor is convinced that the audit observations require immediate attention.
* The internal auditor would like to communicate a change in engagement scope for the activity under review.
* The internal auditor notes that the engagement may extend over a longer time period.
* The audit supervisor believes that issuing interim reports eases supervisory review and controls over working papers.
- A. 2, 3, and 4 only
- B. 1, 2, and 3 only
- C. 2 and 3 only
- D. 1 and 3 only
Answer: B
NEW QUESTION # 47
An audit of management's quality program includes testing the accuracy of the cost-of-quality reports provided to management. Which of the following internal control objectives is the focus of this testing?
- A. To ensure the accomplishment of established objectives and goals for operations or programs.
- B. To ensure compliance with policies, plans, procedures, laws, and regulations.
- C. To ensure the economical and efficient use of resources.
- D. To ensure the reliability and integrity of information.
Answer: D
NEW QUESTION # 48
The most effective procedure to verify compliance with a requirement that materials be purchased from the lowest-priced source is to compare:
- A. Prices paid for selected materials with prices listed on related purchase orders.
- B. Approved vendor lists with bids obtained for selected purchases.
- C. Vendors' current prices with prices listed on related purchase orders.
- D. Bids obtained for selected purchases with related purchase orders.
Answer: D
NEW QUESTION # 49
According to the Standards, which of the following is an attribute when applied to the observations and recommendations contained in the audit report?
- A. Client accomplishments.
- B. Supportive information.
- C. Scope statements.
- D. Effect.
Answer: D
NEW QUESTION # 50
According to the International Professional Practices Framework, the internal audit activity's decision to defer follow-up of recommendations and management's corrective actions until the next scheduled engagement for the area is justified when:
- A. The significance of the finding or recommendation will allow auditors to perform monitoring by receiving periodic updates from management on corrective actions taken.
- B. The action taken by management to address the recommendation is sufficient when weighed against the importance of the finding.
- C. Management has adequately understood and appropriately accepted the risk of not taking action to implement the recommendation.
- D. The reported findings or recommendations are significant enough to require immediate action by management.
Answer: B
Explanation:
Section: Volume D
NEW QUESTION # 51
Which of the following statements is true regarding the communication of audit engagement observations?
- A. Criteria, condition, cause, and effect must be communicated for material observations and significant deficiencies only
- B. Criteria, condition, cause, and effect do not need to be communicated for insignificant observations with adequate compensating key controls.
- C. Criteria, condition, cause, and effect must be communicated for material observations only
- D. Criteria, condition, cause, and effect must be communicated for all engagement observations.
Answer: D
Explanation:
Section: Volume D
Explanation/Reference:
NEW QUESTION # 52
According to IIA guidance, which of re following actions should the internal auditor take immediately after having considered fraud scenarios and identified and prioritized fraud risks?
- A. Research frauds that nave occurred t\ similar organizations
- B. Follow protocol for internal reporting and investigating fraud allegations
- C. Incorporate the fraud risk assessment into the engagement plan
- D. Determine which controls if any are in place to mitigate the fraud risks
Answer: D
NEW QUESTION # 53
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