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IIA-CIA-Part2 Certification Exam is a computer-based exam that is administered at Pearson VUE testing centers around the world. It is available in multiple languages, including English, Spanish, French, German, and Chinese. Candidates can register for the exam online and schedule a testing date and time that is convenient for them.
NEW QUESTION # 25
A chief audit executive (CAE) received a detailed internal report of senior management's internal control assessment. Which of the following subsequent actions by the CAE would provide the greatest assurance over management's assertions?
- A. Determine whether management's operating style and the philosophy described in the report reflect the effective functioning of internal controls.
- B. Evaluate the completeness of the report and management's responses to identified deficiencies.
- C. Assess whether senior management adequately supports and promotes the internal control culture described in the report.
- D. Assert whether the described and reported control processes and systems exist.
Answer: B
NEW QUESTION # 26
Which of the following would not be a typical activity for the chief audit executive to perform following an audit engagement?
- A. Implement follow-up procedures to evaluate residual risk.
- B. Evaluate the extent of improvements.
- C. Determine the costs of implementing the recommendations.
- D. Report follow-up activities to senior management.
Answer: C
Explanation:
Section: Volume E
NEW QUESTION # 27
Which of the following would constitute a violation of the IIA Code of Ethics?
- A. An internal auditor discovered an internal financial fraud during the year, and the financial statements were adjusted to properly reflect the loss associated with the fraud. The auditor discussed the fraud with the external auditor during the external auditor's review of the working papers detailing the incident.
- B. An internal auditor, who has recently joined the organization, has accepted an assignment to audit the electronics manufacturing division. The auditor previously served as senior auditor for the external audit of that division and has audited many electronics companies during the past two years.
- C. An internal auditor has accepted an assignment to audit the warehousing function six months from now. The auditor has no expertise in that area but has signed up for courses in warehousing that will be completed before the assignment begins.
- D. An internal auditor has no ambitions for promotion and has not engaged in training or other professional development activities during the last three years. The auditor's performance assessments indicate consistent quality of work.
Answer: D
NEW QUESTION # 28
A post-audit questionnaire sent to audit clients is an effective mechanism for:
- A. Promoting the internal audit activity.
- B. Substantiating audit observations.
- C. Improving future audit engagements.
- D. Validating process flow.
Answer: C
Explanation:
Section: Volume B
NEW QUESTION # 29
Productivity statistics are provided quarterly to a company's board of directors. An auditor checked the ratios and other statistics in the four most recent reports. The auditor used scratch paper and copies of the board reports to verify the accuracy of computations and compared the data used in the computations with supporting documents. The auditor wrote a note describing this work for the workpapers and then discarded the scratch paper and report copies. The auditor's note stated:
"The ratios and other statistics in the quarterly board reports were checked for the last four quarters, and appropriate supporting documents were examined. All amounts appear to be appropriate."
In this situation:
- A. The auditor's workpapers are not sufficient to facilitate an efficient review of the auditor's work.
- B. The auditor should have considered whether the information in the board report was compiled efficiently.
- C. Four quarters is not a large enough sample on which to base a conclusion.
- D. The auditor should have included the scratch paper in the workpapers.
Answer: A
NEW QUESTION # 30
Which of the following factors could interfere with effective problem solving by an internal auditor?
1. Reacting to previous experiences with clients.
2. Focusing only on the most likely cause.
3. Correcting the symptoms of problems.
- A. I and II only
- B. I only
- C. III only
- D. I, II, and III
Answer: D
NEW QUESTION # 31
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?
- A. Interviews with users to determine their assessment of the level of security in the system and the vulnerability of the system to compromise.
- B. The ability of the LAN application to identify data items at the field or record level and implement user access security at that level.
- C. The level of security of other LANs in the company which also utilize sensitive data.
- D. Investigation of the physical security over access to the components of the LAN.
Answer: C
Explanation:
Section: Volume A
NEW QUESTION # 32
Which of the following audit steps would be most effective to review proper recording of and accountability over physical assets?
1. Physically inspect all assets on the organization's property.
2. Select a sample department and physically inspect assets in the department.
3. Select a sample from the organization's records of physical assets and physically locate each asset.
4. Identify assets at a sample of locations and trace to the organization's records.
- A. I only
- B. I and IV only
- C. III and IV only
- D. II and III only
Answer: C
NEW QUESTION # 33
Which of the following conditions should a chief audit executive take into account when deciding if a follow-up audit engagement is necessary?
The reported observations were significant and high risk. Internal audit resources and the time it will require for follow-up. Management may not have the resources to take action. Management has previously decided not to take any action.
- A. 1, 3, and 4 only.
- B. 2, 3, and 4 only.
---- - C. 1, 2, and 4 only.
- D. 1, 2, and 3 only.
Answer: C
NEW QUESTION # 34
While conducting a review of the logistics department the internal audit team identified a crucial control weakness. The chief audit executive (CAE) decided to prepare an audit memorandum for management of the logistics department followed by an informal meeting What is the most likely reason the CAE decided to prepare the audit memorandum?
- A. To obtain management's agreement with regard to the identified weakness
- B. To ensure that the internal audit team and the CAE are aligned with regard to the identified weakness
- C. To allow management to address the identified weakness timely
- D. To report up-to-date audit progress to management
Answer: C
NEW QUESTION # 35
Which of the following statements is false regarding audit criteria?
- A. Audit criteria should equate to good or acceptable management practices.
- B. Audit criteria should represent reasonable standards against which to assess existing conditions.
- C. Audit criteria should be consistent across audit assignments.
- D. Audit criteria should provide flexibility but allow identification of nonadherence.
Answer: C
NEW QUESTION # 36
Which of the following statements is true?
- A. Internal audit's responsibility for an assurance engagement observation ends when management implements changes to remediate the observation.
- B. An assurance engagement observation is considered remediated when management's corrective action plan is approved by the board.
- C. If management chooses not to take action on internal audit's assurance engagement observation, the chief audit executive (CAE) has a responsibility to propose an action plan to the board.
- D. When management decides to accept the risk of not taking action on an assurance observation, the (CAE) is responsible for judging whether or not that decision is prudent.
Answer: D
NEW QUESTION # 37
Which of the following are key characteristics of enterprise risk management?
It considers risk in the formulation of strategy.
It applies risk management in some units of an entity.
It takes a portfolio view of risks throughout the enterprise.
It restricts the organization's ability to seize opportunities inherent in future events.
- A. 1 and 4 only.
- B. 2 and 3 only.
- C. 2 and 4 only.
- D. 1 and 3 only.
Answer: D
NEW QUESTION # 38
An auditor is performing a review of a complex process to identify opportunities to increase efficiency. What is the most practical way to document the process to identify areas of inefficiency?
- A. Flowchart the process.
- B. Write a description of the process activities in sequential order.
- C. Create a decision tree.
- D. Develop a PERT (program evaluation and review technique) diagram.
Answer: A
Explanation:
Section: Volume B
NEW QUESTION # 39
Which of the following documents should the chief audit executive review and approve?
1.Workpaper retention policy.
2.Audit committee meeting minutes.
3.Internal audit handbook.
4.Quarterly financial statements.
- A. 2 and 4 only
- B. 1, 3, and 4 only
- C. 1 and 2 only
- D. 1 and 3 only
Answer: D
NEW QUESTION # 40
According to IIA guidance, which of the following is least likely to be a key financial control in an organization's accounts payable process?
- A. Monitor amounts paid each period and compare them to the budget to identify potential issues.
- B. Compare employee addresses to vendor addresses to identify potential employee fraud.
- C. Monitor customer quality complaints compared to the prior period to identify vendor issues.
- D. Require the approval of additions and changes to the vendor master listing, where the inherent risk of false vendors is high.
Answer: C
NEW QUESTION # 41
Which of the following activities would be performed during a benchmarking consulting engagement?
I. Collect data relevant to the benchmarking process.
II. Review all business processes.
III. Define critical success factors.
IV. Identify performance gaps.
- A. I, III, and IV only
- B. I, II, and III only
- C. II and IV only
- D. I and III only
Answer: A
Explanation:
Section: Volume B
NEW QUESTION # 42
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. Estimate the added cost, report it to management, and suggest that management meet with its lawyers and the contractor to resolve differences.
- C. Exclude the observation from the engagement final communication because the contract was vague and the level of security is clearly acceptable.
- 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: B
Explanation:
Section: Volume C
NEW QUESTION # 43
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