IIA-CIA-Part2 Practice Exam and Study Guides - Verified By Test4Engine Updated 600 Questions
2022 Updated Verified Pass IIA-CIA-Part2 Study Guides & Best Courses
NEW QUESTION 220
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 221
Which of the following conclusions would be appropriate for a beginning auditor performing an audit of a payroll department?
- A. The payroll department staff has the appropriate level of skills.
- B. The payroll computer system should be replaced.
- C. Employee taxes have been deducted at the correct rates, and the taxes have been forwarded to the appropriate government agency.
- D. Although there is insufficient segregation of duties, the impact is mitigated by compensating controls.
Answer: C
NEW QUESTION 222
Direct staff as a percentage of total staff is an example of which of the following types of efficiency measures?
- A. Productivity ratio.
- B. Productivity index.
- C. Resource utilization rate.
- D. Operating ratio.
Answer: D
NEW QUESTION 223
According to IIA guidance, which of the following is the least appropriate role for the internal audit activity in the organization's risk management program?
- A. Providing ethics training sessions to organization staff.
- B. Monitoring the organization's whistle-blower hotline.
- C. Assessing the risk of fraudulent activity in the organization.
- D. Conducting full investigations of suspected fraud.
Answer: C
NEW QUESTION 224
In a health care organization the internal audit activity provides overall assurance on governance, risk and control The chief audit executive advises and influences senior management, and the audit strategy leverages the organization's management of risk According to HA guidance which of the following stages of internal audit maturity best describes this organization?
- A. Infrastructure.
- B. Managed.
- C. Initial.
- D. Emerging.
Answer: B
NEW QUESTION 225
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. II and III only
- B. III and IV only
- C. I only
- D. I and IV only
Answer: B
NEW QUESTION 226
The most effective procedure to verify compliance with a requirement that materials be purchased from the lowest-priced source is to compare:
- A. Approved vendor lists with bids obtained for selected purchases.
- B. Bids obtained for selected purchases with related purchase orders.
- C. Prices paid for selected materials with prices listed on related purchase orders.
- D. Vendors' current prices with prices listed on related purchase orders.
Answer: B
NEW QUESTION 227
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?
- A. Enter into long-term gasoline purchase agreements with end customers.
- B. Purchase crude oil-related derivatives such as futures or options
- C. Stock as much raw materials as possible and consider Investing into additional facilities
- D. Trade crude oil derivatives at financial markets in order to benefit from price fluctuations
Answer: A
NEW QUESTION 228
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?
- A. Independence.
- B. Familiarity.
- C. Cost.
- D. Flexibility.
Answer: B
Explanation:
Section: Volume E
NEW QUESTION 229
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. 1 and 2
- B. 3 and 4
- C. 2 and 4
- D. 1 and 3
Answer: B
NEW QUESTION 230
When interviewing an individual in relation to a fraud investigation, which course of action should the internal auditor follow?
- A. Refrain from deviating from the list of questions prepared before the interview.
- B. Discontinue questioning once the individual has confessed to the fraud.
- C. Establish a rapport with the subject to encourage openness.
- D. Assure the individual that the results of the interview will remain confidential.
Answer: C
NEW QUESTION 231
An auditor is using an internal control questionnaire as part of a preliminary survey. Which of the following is the best reason for the auditor to interview management regarding the questionnaire responses?
- A. Interviews provide the opportunity to insert questions to probe promising areas.
- B. Interviews are the most efficient way to upgrade the information to the level of objective evidence.
- C. Interviewing is the only audit procedure which does not require confirmation of the information that is obtained.
- D. Interviewing is the least costly audit technique when a large amount of information is involved.
Answer: A
Explanation:
Section: Volume A
NEW QUESTION 232
An audit identified a number of weaknesses in the configuration of a critical client/server system. Although some of the weaknesses were corrected prior to the issuance of the audit report, correction of the rest will require between six and 18 months for completion. Consequently, management has developed a detailed action plan, with anticipated completion dates, for addressing the weaknesses. Which of the following is the most appropriate course of action for the chief audit executive to take?
- A. Reassign information systems auditors to assist the information technology department in correcting the weaknesses.
- B. Assess the adequacy of the action plan and monitor key dates and deliverables.
- C. Evaluate statistics related to unplanned system outages, unauthorized access attempts, and denials of service to assess the effectiveness of corrections.
- D. Schedule a follow-up audit engagement to assess the status of corrective action.
Answer: B
NEW QUESTION 233
An internal audit activity implemented an integrated test facility to test payroll processing.
The auditors identified the key controls and processing steps built into the computer program and developed test data to test them. The auditors submitted test transactions throughout the year and did not find any differences in their test results. The auditors can conclude that:
- A. All of the above.
- B. The computer application and its control procedures were processing payroll transactions correctly during the past year.
- C. The system is properly capturing the hours worked by employees during the year and the hours have been properly submitted to payroll and processed correctly.
- D. All employees were correctly paid during the year and their pay was correctly computed.
Answer: B
NEW QUESTION 234
Under what circumstances would internal audit not become involved when intentional misconduct is suspected?
- A. Management does not maintain strong internal controls.
- B. Management does not believe a trusted employee could be guilty.
- C. Management is running a parallel investigation.
- D. Management is involved in wrongdoing.
Answer: C
NEW QUESTION 235
According to the International Professional Practices Framework, which of the following statements is correct regarding the communication of audit results?
I. Summary reports may be issued separately from or in conjunction with the final report.
II. Interim reports may be written or oral.
III. Detailed reports should always be issued to the audit committee.
IV. Interim reports should be used to communicate information which requires immediate attention.
- A. II and IV only
- B. I, II, III, and IV.
- C. I, II, and IV only
- D. I and III only
Answer: C
Explanation:
Section: Volume A
Explanation/Reference:
NEW QUESTION 236
Which of the following conditions is the strongest indicator of possible fraud?
- A. A manager who is often over budget at the end of a reporting period.
- B. A condition of excess manufacturing waste material.
- C. An assistant treasurer who refuses to take vacations.
- D. Independent reconciliations of subsidiary to general ledgers that are not always completed on a timely basis.
Answer: C
Explanation:
Section: Volume A
NEW QUESTION 237
An internal auditor recommended that an organization implement computerized controls in its sales system in order to prevent sales representatives from executing contracts in excess of their delegated authority levels. A follow-up review found that the sales system had not been modified, but a process had been implemented to obtain written approval by the vice president of sales for all contracts in excess of $1 million. The chief audit executive (CAE) would be justified in reporting this situation to the organization's board if:
I. In the opinion of the CAE, the level of residual risk assumed by senior management is too high.
II. Testing of compliance with the new process finds that all new contracts in excess of $1 million have been approved by the vice president of sales.
III. The cost of modifying the sales system to include a preventive control is less than $100,000.
- A. III only
- B. I and III only
- C. I, II, and III
- D. I only
Answer: D
Explanation:
Section: Volume C
NEW QUESTION 238
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.
- A. Probability-proportional-to-size sampling to select a sample of vouchers processed by the department during the past year.
- B. Discovery sampling to select a sample of vouchers processed by the department during the past year.
- C. Judgmental sampling to select a sample of vouchers processed by clerks who were identified by the department manager as acting suspiciously.
- D. Simple random sampling to select a sample of vouchers processed by the department during the past year.
Answer: B
Explanation:
Section: Volume A
NEW QUESTION 239
An internal auditor recommended that an organization implement computerized controls in its sales system in order to prevent sales representatives from executing contracts in excess of their delegated authority levels. A follow-up review found that the sales system had not been modified, but a process had been implemented to obtain written approval by the vice president of sales for all contracts in excess of $1 million. The chief audit executive (CAE) would be justified in reporting this situation to the organization's board iF.
I.In the opinion of the CAE, the level of residual risk assumed by senior management is too high.
II.
Testing of compliance with the new process finds that all new contracts in excess of $1 million have been approved by the vice president of sales.
III.
The cost of modifying the sales system to include a preventive control is less than $100,000.
- A. I and III only.
- B. I, II, and III.
- C. I only.
- D. III only.
Answer: C
NEW QUESTION 240
Once an audit report is drafted, the auditor's supervisor should review it primarily to ensure that all:
- A. Recommendations for corrective action are clear.
- B. Statements are supported and can be authenticated.
- C. Sample sizes appear appropriate for any issues found.
- D. Processes within the audited area were reviewed.
Answer: B
Explanation:
Section: Volume B
NEW QUESTION 241
Which of the following statements is true?
- A. The internal audit activity's plan of engagments must be based on a formal quantitative risk assessment.
- B. A risk assessment on which to base the internal audit activity's long-range plan must be undertaken at least once every three years.
- C. The chief audit executive should consider changes to the long-range audit plan based on the requests of business unit managers.
- D. Consulting engagements provide the internal audit activity with flexibility to add value and do not need to be included in the long-range audit plan.
Answer: C
Explanation:
Section: Volume D
NEW QUESTION 242
......
IIA IIA-CIA-Part2 Exam Syllabus Topics:
| Topic | Details |
|---|---|
| Topic 1 |
|
| Topic 2 |
|
| Topic 3 |
|
| Topic 4 |
|
Ultimate Guide to the IIA-CIA-Part2 - Latest Edition Available Now: https://actualtests.test4engine.com/IIA-CIA-Part2-real-exam-questions.html