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Free IIA IIA-CIA-Part2 Exam Questions & Answer
IIA IIA-CIA-Part2 Exam Syllabus Topics:
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NEW QUESTION 116
Which of the following would be a red flag that indicates the possibility of inventory fraud?
1. The controller has assumed responsibility for approving all payments to certain vendors.
2. The controller has continuously delayed installation of a new accounts payable system, despite a corporate directive to implement it.
3. Sales commissions are not consistent with the organization's increased levels of sales.
4. Payments to certain vendors are supported by copies of receiving memos, rather than originals.
- A. II and III only
- B. I, II, and IV only
- C. I, III, and IV only
- D. I and II only
Answer: B
NEW QUESTION 117
When determining the nature, timing, and extent of follow up, the chief audit executive considers all of the following factors except:
- A. Complexity of the corrective action and time period involved.
- B. Impact that may result should the corrective action fail.
- C. Significance of the reported observation or recommendation, degree of effort, and cost needed to correct the reported condition.
- D. Authority and responsibility of the person required to take corrective action.
Answer: D
NEW QUESTION 118
Which of the following would most likely cause an internal auditor to consider adding fraud work steps to the audit program?
- A. Lack of an ethics policy.
- B. An employee's reported concerns.
- C. Incentives and bonus programs.
- D. Improper segregation of duties.
Answer: B
NEW QUESTION 119
An auditor decides to perform an inventory turnover analysis for both raw materials inventory and finished goods inventory. The analysis would be potentially useful in:
I. Identifying products for which management has not been attuned to changes in market demand.
II. Identifying potential problems in purchasing activities.
III. Identifying obsolete inventory.
- A. III only
- B. II and III only
- C. I, II, and III
- D. I and II only
Answer: C
Explanation:
Section: Volume A
NEW QUESTION 120
A large retail organization, which sells most of its products online, experiences a computer hacking incident. The chief IT officer immediately investigates the incident and concludes that the attempt was not successful. The chief audit executive (CAE) learns of the attack in a casual conversation with an IT auditor. Which of the following actions should the CAE take?
1. Meet with the chief IT officer to discuss the report and control improvements that will be implemented as a result of the security breach, if any.
2. Immediately inform the chair of the audit committee of the security breach, because thus far only the chief IT officer is aware of the incident.
3. Meet with the IT auditor to develop an appropriate audit program to review the organization's Internet-based sales process and key controls.
4. Include the incident in the next quarterly report to the audit committee.
- A. 1 and 2
- B. 3 and 4
- C. 2 and 4
- D. 1 and 3
Answer: A
NEW QUESTION 121
A company has recently incurred significant cost overruns on one of its construction projects. Management suspects that these overruns were caused by the contractor improperly accounting for costs related to contract change orders. Which of the following procedures would be appropriate for testing this suspicion?
I. Verify that the contractor has not charged change orders with costs that have already been billed to the original contract.
II. Determine if the contractor has billed for original contract work that was canceled as a result of change orders.
III. Verify that the change orders were properly approved by management.
- A. III only
- B. I and III only
- C. I only
- D. I and II only
Answer: D
NEW QUESTION 122
Which of the following topics must the internal audit staff discuss with management during the exit conference?
1. Issues identified during the audit.
2. Evaluation criteria used to select controls for testing.
3. Staff who were interviewed during the audit.
4. The reporting process for the draft and final report.
- A. 2 and 4 only
- B. 2 and 3 only
- C. 1 and 3 only
- D. 1 and 4 only
Answer: D
NEW QUESTION 123
Which of the following would most likely cause an internal auditor to consider adding fraud work steps to the audit program?
- A. Lack of an ethics policy.
- B. An employee's reported concerns.
- C. Incentives and bonus programs.
- D. Improper segregation of duties.
Answer: B
NEW QUESTION 124
During an audit of executive travel, an auditor noted that the president's travel expense reimbursements were approved by an executive secretary who reported to the president. The organization's reimbursement policy requires all travel expense reimbursements to be approved by the traveler's supervisor, but it does not address the president's reimbursements. Which of the following represents the auditor's best recommendation in this situation?
- A. The organization's reimbursement policy should be amended to grant the president's executive secretary the authority to approve the president's travel expense reimbursements.
- B. The president's travel expense reimbursements should be reviewed and approved by the chief financial officer.
- C. The approval policy for executive travel should be considered at the next meeting of the audit committee of the board of directors.
- D. The president's noncompliance should be considered immaterial.
Answer: C
NEW QUESTION 125
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. Discontinue audit work associated with the insider trading since it is not relevant to the existing audit.
- B. 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.
- C. Report the evidence to external legal counsel for investigation. Report the legal counsel findings to management.
- D. Report the evidence to the chairperson of the audit committee and recommend an investigation.
Answer: D
Explanation:
Section: Volume C
Explanation/Reference:
NEW QUESTION 126
Which of the following statements describes an engagement planning best practice?
- A. Engagement planning activities include setting engagement objectives that align with audit client's business objectives.
- B. If the engagement subject matter is not unique, it is not necessary to outline specific testing procedures during the planning phase.
- C. The engagement plan includes the expected distribution of the audit results, which should be kept confidential until the audit report is final.
- D. It is best to determine planning activities on a case-by-case basis because they can vary widely from engagement to engagement.
Answer: A
NEW QUESTION 127
Management has asked the internal audit activity to perform an operational audit of a division that recently reported an increase in expenditures in addition to a decrease in profits. However, existing internal audit resources are currently engaged in a legal compliance audit. Which factor would be considered least important in deciding whether resources should be removed from the legal compliance audit to the operational audit?
- A. The probability that the legal compliance audit will detect fraud.
- B. The results of the external auditor's most recent financial audit.
- C. The potential for regulatory fines associated with the legal compliance audit.
- D. The increase in expenditures at the division over the past year.
Answer: B
NEW QUESTION 128
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?
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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
NEW QUESTION 129
While investigating a compromised Web server, an auditor found that the Web server logs had been deleted. The auditor should recommend that the Web server logs be:
- A. Restored automatically to the Web server from backup files.
- B. Generated and maintained on a separate secure server.
- C. Accessible by administrative users only.
- D. Encrypted to ensure that the logs cannot be deleted.
Answer: B
NEW QUESTION 130
The chief audit executive (CAE) for a manufacturing company included in this year s audit plan a review of the company's laboratory, using an experienced external service provider. The audit plan was approved by the audit committee without any changes At the time of engaging the external service provider, the CAE also secured the approval from the CEO. Who is responsible for ensuring that the conclusions reached for this exercise are adequately supported7
- A. Audit committee
- B. CEO
- C. CAE.
- D. External service provider
Answer: C
NEW QUESTION 131
An organization has recently incurred significant cost overruns on one of its construction projects. Management suspects that these overruns were caused by the contractor improperly charging for costs related to contract change orders. Which of the following procedures are appropriate for testing this suspicion?
1. Determine if the contractor has received proper approval of change orders from management.
2. Determine if the contractor has billed for original contract work cancelled by the change orders.
3. Determine if the contractor has charged change orders with costs already billed to the original contract.
4. Determine if the contractor has been paid for change orders that have not yet been completed.
- A. 2 and 3 only
- B. 1 and 3 only
- C. 1 and 2 only
- D. 3 and 4 only
Answer: A
NEW QUESTION 132
Which two of the following considerations must an internal auditor take into account while planning an audit of an accounting system/application that has been in use for the last five years?
* The level and manner of linkages between the business' mission, objectives, and structure and the accounting system/application.
* Presence or absence of computerized and manual controls that address risks.
* Identification of risks at the application level, e.g. availability and security of the system.
* Testing of the system/application for bugs and errors.
- A. 2 and 3 only
- B. 2 and 4 only
- C. 1 and 3 only
- D. 3 and 4 only
Answer: A
NEW QUESTION 133
While conducting an audit of a third party's Web-based payment processor, an internal auditor discovers that a programming error allows customers to create multiple accounts for a single mailing address. Management agrees to correct the program and notify customers with multiple accounts that the accounts will be consolidated. Which of the following actions should the auditor take?
1.Schedule a follow-up review to verify that the program was corrected and the accounts were consolidated.
2.Evaluate the adequacy and effectiveness of the corrective action proposed by management.
3.Amend the scope of the subsequent audit to verify that the program was corrected and that accounts were consolidated.
4.Submit management's plan of action to the external auditors for additional review.
- A. 1 and 2
- B. 3 and 4
- C. 1 and 4
- D. 2 and 3
Answer: A
NEW QUESTION 134
Which of the following would be a legitimate action for the internal auditor to take when monitoring audit engagement results?
Disregard a certain risk because management and the board accepted the risk in the past.
Abdicate the responsibility for a particular risk because it is not part of the audit plan.
Obtain agreement from senior management that unresolved audit issues will be reported to the board.Request corrective action from management in writing.
- A. 1 and 3 only.
- B. 1, 2, and 4 only.
- C. 2 and 3 only.
- D. 3 and 4 only.
Answer: D
NEW QUESTION 135
When constructing a staffing schedule for the internal audit activity (IAA), which of the following criteria are most important for the chief audit executive to consider for the effective use of audit resources?
1.The competency and qualifications of the audit staff for specific assignments.
2.The effectiveness of IAA staff performance measures.
3.The number of training hours received by staff auditors compared to the budget.
4.The geographical dispersion of audit staff across the organization.
- A. 2 and 4
- B. 2 and 3
- C. 1 and 3
- D. 1 and 4
Answer: D
NEW QUESTION 136
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