IIA-CIA-Part2 Dumps with Practice Exam Questions Answers
IIA-CIA-Part2 by Certified Internal Actual Free Exam Practice Test
NEW QUESTION 130
Which of the following describes an internal auditor's responsibilities to include audit procedures to detect fraud in audits of a multinational organization?
- A. Proper audit procedures, when carried out with due professional care, will guarantee that fraud, if present, will be detected.
- B. Internal auditors do not have any specific responsibilities with respect to including fraud-related audit procedures.
- C. International Accounting Standards require the internal auditor to include audit procedures which would detect fraud if it would cause a material misrepresentation of the financial statements.
- D. If significant control weaknesses are detected, additional tests should be directed toward other indicators of fraud.
Answer: D
NEW QUESTION 131
If an auditor expects to find numerous discrepancies between recorded values and audited values of sample selections, which sampling technique would be most appropriate?
- A. Difference estimation sampling.
- B. Attributes sampling.
- C. Probability-proportional-to-size sampling.
- D. Discovery sampling.
Answer: A
NEW QUESTION 132
A chief audit executive is preparing interview questions for the upcoming recruitment of a senior internal auditor. According to IIA guidance, which of the following attributes shows a candidate's ability to probe further when reviewing incidents that have the appearance of misbehavior?
- A. Initiative.
- B. Flexibility.
- C. Curiosity.
- D. Integrity.
Answer: C
Explanation:
Section: Volume E
NEW QUESTION 133
Which of the following is a red flag associated with improper asset valuation?
- A. Unusual decrease in the number of days' purchases in inventory.
- B. Unusual increase in gross margin.
- C. Recurring positive cash flows from operations.
- D. Allowance for bad debts that is increasing in percentage terms.
Answer: B
NEW QUESTION 134
The following is an excerpt from an audit engagement workpaper:
-A Company -Accounts Receivable -Date
Objective. To determine if the computer system is correctly recording all accounts receivable transactions.
Procedures: Judgmental selection of a sample of all accounts receivable balances greater than $50,000 for positive confirmation of balances.
Conclusion: Based on the results of testing wherein all but three confirmations were returned, the accounts receivable balance is fairly presented in all material respects.
Which of the following is true regarding the workpaper?
- A. The format of the workpaper does not conform to the standard format for workpapers.
- B. The audit procedures used are not consistent with the audit objective.
- C. A conclusion should be reached only for the results of overall testing, not for individual procedures.
- D. It is not appropriate to judgmentally select a sample when testing accounts receivable.
Answer: B
NEW QUESTION 135
An organization's policies allow buyers to authorize expenditures up to $50,000 without any other approval.
Which of the following audit procedures would be most effective in determining if fraud in the form of payments to fictitious companies has occurred?
- A. Develop a snapshot technique to trace all transactions by suspected buyers.
- B. Use generalized audit software to take a random sample of all expenditures under $50,000 to determine whether they were properly approved.
- C. Use generalized audit software to list all purchases over $50,000 to determine whether they were properly approved.
- D. Use generalized audit software to select a sample of paid invoices to new vendors and examine evidence that shows that services or goods were received.
Answer: D
NEW QUESTION 136
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.
1. Treasurer.
2. Chief financial officer.
3. President.
4. Board.
- A. I, II, III, and IV.
- B. III and IV only
- C. I and II only
- D. I, II, and III only
Answer: A
NEW QUESTION 137
As a result of a recent discovery of false information on employment applications, an internal auditor has reviewed hiring procedures. Which of the following represents a weakness in the control system?
I. Applicants are not required to have their signed applications legally authenticated.
II. Applicants' educational information is not validated with the educational institution before employment is offered.
III.
Information related to applicants' long-term work history is not validated before employment is offered.
- A. III only
- B. II and III only
- C. I, II, and III
- D. I and II only
Answer: B
NEW QUESTION 138
An auditor-in-charge is preparing her audit team for a consulting engagement at one of the organization's foreign subsidiaries. According to the Standards, which of the following would not be a necessary step prior to beginning the engagement?
- A. Communicate what logistical support will be provided by the subsidiary for the duration of the engagement.
- B. Communicate a time frame as well as a contingency plan in the event the engagement may take longer than expected.
- C. Agree, in writing, with the subsidiary's senior management regarding the scope of the engagement.
- D. Verify that none of the audit team worked for the foreign subsidiary within the last year to ensure independence.
Answer: D
NEW QUESTION 139
During an engagement, an internal auditor discovered that an organization's policy on delegation of authority listed six individuals who were no longer employed with the organization. In addition, four individuals acting with disbursement authority were not identified in the policy as having such authority. Which of the following is the most effective course of action to address the control weakness?
- A. Recommend that management review the process supporting the policy and make improvements.
- B. Immediately initiate a complete audit of the disbursement function to determine if significant frauds have occurred.
- C. Review further to ensure that the four individuals do not have the appropriate authority through delegation.
- D. Advise management to add the four additional names and remove the incorrect names from the policy to make it current.
Answer: A
NEW QUESTION 140
Which of the following potential performance measures should an auditor recommend excluding from a performance scorecard?
- A. Training dollars per employee.
- B. Number of customer complaints.
- C. Number of employees.
- D. Market share.
Answer: C
NEW QUESTION 141
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 142
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. Discuss it with operating supervisors who are directly affected by the change, and then with department management.
- C. Bring it to the audit manager, who should bring it immediately to senior management's attention.
- D. Carefully work out the details of implementation before presenting it to department management.
Answer: B
NEW QUESTION 143
An internal auditor wants to determine whether employees are complying with the information security policy, which prohibits leaving sensitive information on employee desks overnight. The auditor checked a sample of 90 desks and found eight that contained sensitive information. How should this observation be reported, if the organization tolerates 4 percent noncompliance?
- A. The incidents of noncompliance exceed the tolerance level and should be included in the final engagement report.
- B. The deviations are within the acceptable tolerance limit, so the matter only needs to be reported to the information security manager.
- C. The incidents of noncompliance fall outside the acceptable tolerance limit and require immediate corrective action, as opposed to reporting.
- D. The matter does not need to be reported, because the noncompliant findings fall within the acceptable tolerance limit.
Answer: A
NEW QUESTION 144
The internal audit activity's primary responsibility in a review or examination of the organization by an external regulatory body is to:
- A. Document the responses to the regulator's findings.
- B. Verify that regulatory reviews occur with adequate frequency.
- C. Provide follow-up to determine if the regulator's findings are appropriately resolved by management.
- D. Prepare documentation for the regulator.
Answer: C
NEW QUESTION 145
While reviewing the draft report of an audit engagement, the chief audit executive (CAE) is not in agreement with management's acceptance of the potential risk exposure resulting from an observed key control weakness. Which of the following actions by the CAE would be appropriate for addressing this concern?
----
Meet with the auditor-in-charge. Discuss with senior management. Monitor the result of the accepted risk. Report the matter to the board.
- A. 1, 2, and 4 only.
- B. 1, 2, and 3 only.
- C. 1, 3, and 4 only.
- D. 2, 3, and 4 only.
Answer: A
NEW QUESTION 146
When creating the internal audit plan, the chief audit executive should prioritize engagements based primarily on which of the following?
- A. Requests from senior management and the board.
- B. The longest interval since the last examination of each audit universe item.
- C. The last available risk assessment.
- D. The auditable areas required by regulatory agencies.
Answer: C
NEW QUESTION 147
Due to the expanded role of internal audit in the organization, the chief audit executive (CAE) of a construction company decides to employ the services of an outsourced audit service provider to augment the internal audit staff. What does the CAE need to consider in determining whether the outsourced audit service provider possesses the necessary knowledge, skills and other competencies to perform an audit engagement?
- A. The reputation of the external service provider.
- B. The financial interest that the external service provider may have in the organization.
- C. Specific matters expected to be covered in the engagement communications.
- D. The extent of other ongoing services the external service provider may be performing for the organization.
Answer: A
NEW QUESTION 148
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