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IIA-CIA-Part2 exam is a rigorous test that requires a thorough understanding of internal auditing concepts and practices. IIA-CIA-Part2 exam covers a range of topics such as risk management, governance, communication, and internal control. Candidates are expected to have practical experience in the field of internal auditing and be able to apply their knowledge to real-world situations. IIA-CIA-Part2 exam is computer-based and consists of 100 multiple-choice questions that must be completed within two and a half hours.
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NEW QUESTION # 130
Which of the following would be an appropriate and effective control self-assessment approach in an organization with an authoritative culture?
I. Facilitated meeting
II. Survey
III. Management-produced analysis
- A. II and III only
- B. I only
- C. I, II, and III
- D. I and III only
Answer: A
NEW QUESTION # 131
Which of the following is not relevant when developing recommendations for inclusion in audit reports?
- A. Timing of follow-up.
- B. Underlying causes.
- C. Cost of implementation.
- D. Feasibility.
Answer: A
NEW QUESTION # 132
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 system is properly capturing the hours worked by employees during the year and the hours have been properly submitted to payroll and processed correctly.
- C. All employees were correctly paid during the year and their pay was correctly computed.
- D. The computer application and its control procedures were processing payroll transactions correctly during the past year.
Answer: D
NEW QUESTION # 133
A key to effective benchmarking in a consulting engagement is identifying the issues that can be:
- A. Measured and controlled by the engagement client.
- B. Shared with all internal audit customers.
- C. Discussed with the board or audit committee.
- D. Reviewed by all internal audit staff members.
Answer: A
NEW QUESTION # 134
Which of the following types of contracts would provide the least incentive for a contractor to achieve economy and efficiency?
- A. Unit-price contract.
- B. Cost-plus contract.
- C. Indefinite delivery contract.
- D. Lump-sum contract.
Answer: B
Explanation:
Section: Volume C
Explanation/Reference:
NEW QUESTION # 135
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. Note in the permanent file that follow-up needs to be performed as part of the next engagement.
- C. Follow-up with management until a written response is obtained.
- D. Escalate the issue to the board and get their position on the issue.
Answer: B
Explanation:
Section: Volume A
NEW QUESTION # 136
A performance audit engagement typically involves:
- A. Evaluation of organizational and departmental structures, including assessments of process flows.
- B. Tests of compliance with policies, procedures, laws, and regulations.
- C. Review of financial statement information, including the appropriateness of various accounting treatments.
- D. Appraisal of the environment and comparison against established criteria.
Answer: D
NEW QUESTION # 137
In advance of a preliminary survey, a chief audit executive sends a memorandum and questionnaire to the supervisors of the department to be audited. What is the most likely result of that procedure?
- A. It is only useful for audits of distant locations.
- B. It creates apprehension about the audit engagement.
- C. It involves the engagement client's supervisory personnel in the audit.
- D. It is an uneconomical approach to obtaining information.
Answer: C
Explanation:
Section: Volume C
NEW QUESTION # 138
Which of the following statements is correct regarding the use of a program evaluation and review technique (PERT) model?
It makes use of a probability model to arrive at a realistic estimate of time necessary for completion of the audit engagement.
It requires that activities are performed in sequence such that each task is completed before the commencement of the next activity.
It remains fixed once completed to act as a baseline for measuring the performance of the audit staff following completion of the engagement.
It begins with the auditor-in-charge identifying the overall scope and then breaking down the audit engagement into identifiable activity units.
- A. 2 and 4 only
- B. 1 and 3 only
- C. 2 and 3 only
- D. 1 and 4 only
Answer: D
NEW QUESTION # 139
Which of the following is the least relevant when preparing the internal audit activity's annual engagement plan?
- A. A rotation of internal audit engagements selected on a time basis.
- B. The organization's current risk priority and exposure.
- C. Senior management's requests for internal audit engagements.
- D. Coordination with the audit plans of the external auditor.
Answer: A
NEW QUESTION # 140
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. Four quarters is not a large enough sample on which to base a conclusion.
- C. The auditor should have considered whether the information in the board report was compiled efficiently.
- D. The auditor should have included the scratch paper in the workpapers.
Answer: A
NEW QUESTION # 141
Which of the following is an appropriate responsibility for the internal audit activity with regard to the organization's risk management program?
- A. Ensuring that a proper and effective risk management process exists.
- B. Attaining an adequate understanding of the entity's key mitigation strategies.
- C. Identifying and ensuring that appropriate controls exist to mitigate risks.
- D. Identifying and managing risks in line with the entity's risk appetite.
Answer: B
NEW QUESTION # 142
An internal auditor has just undertaken an organization-wide risk assessment. In identifying potential audit engagements, the internal auditor should consider least:
- A. Focusing in areas not audited last year.
- B. Focusing on the high risk areas as sources of potential engagements.
- C. Focusing on those risks highlighted by the external auditor.
- D. Factoring in management requests.
Answer: A
Explanation:
Section: Volume C
NEW QUESTION # 143
Due to a recent system upgrade, an audit is planned to test the payroll process. Which of the following audit objectives would be most important to prevent fraud?
- A. Verify that amounts are correct.
- B. Verify that benefits deductions are accurate.
- C. Verify that payments are on time.
- D. Verify that recipients are valid employees.
Answer: D
NEW QUESTION # 144
Which of the following is a justifiable reason for omitting advance client notice when planning an audit engagement?
- A. The engagement includes audit assurance procedures such as sensitive or restricted asset verifications.
- B. Previous management action plans addressing prior internal audit recommendations remain incomplete.
- C. The audit engagement has already been communicated and approved through the annual audit plan.
- D. Advance notice may result in management making corrections to reduce the number of potential deficiencies.
Answer: A
Explanation:
Section: Volume E
NEW QUESTION # 145
Which of the following factors should a chief audit executive consider when determining the audit universe?
1. Components of the organization's strategic plan.
2. Inputs from senior management and the board.
3. Views of competitors and business associates.
4. Results of exit interviews with departing employees.
- A. 2 and 4 only
- B. 1 and 2 only
- C. 2, 3, and 4
- D. 1, 2, and 4
Answer: B
Explanation:
Section: Volume E
NEW QUESTION # 146
During an interview with a manager in a company's claims department, an auditor noted that the manager became nervous and changed the subject whenever the auditor raised questions about certain types of claims. The manager's answers were consistent with company policies and procedures. When documenting the interview, the auditor should:
- A. Disregard the interview entirely because the verbal and nonverbal communications were contradictory.
- B. Conclude that the nonverbal communication is persuasive and that sufficient evidence exists to begin a fraud investigation.
- C. Document the manager's answers but not the nonverbal communication because it is subjective and is not corroborated.
- D. Document the manager's answers, noting the nature of the nonverbal communication.
Answer: D
NEW QUESTION # 147
The newly appointed chief audit executive (CAE) of a large multinational corporation, with seasoned internal audit departments located around the world, is reviewing responsibilities for engagement reports. According to IIA guidance, which of the following statements is true?
- A. The CAE is required to review, approve, and sign all regulatory compliance engagement reports only
- B. The internal audit charter must identify authorized signers of engagement reports.
- C. The CAE may delegate responsibility for reviewing, approving and signing engagement reports, but should review the reports after they are issued.
- D. The CAE is required to review, approve, and sign every engagement report.
Answer: C
NEW QUESTION # 148
An internal auditor determines that certain information from the engagement results is not appropriate for disclosure to all report recipients because it is privileged. In this situation, which of the following actions would be most appropriate?
- A. Exclude the results from the report and verbally report the conditions to senior management and the board.
- B. Distribute the information in a confidential report to the board only.
- C. Distribute the reports through the use of blind copies.
- D. Disclose the information in a separate report.
Answer: D
NEW QUESTION # 149
Which of the following risk assessment approaches involves gathering data from work team representing different levels of an organisation?
- A. Management produced analysis 0
- B. Surveys
- C. Weighted risk factors
- D. Facilitated team workshops
Answer: B
NEW QUESTION # 150
While performing fieldwork for an assurance engagement, a member of the internal audit team identified a key control that was not identified during the planning phase of the engagement Which of the following actions by the internal auditor would be most appropriate?
- A. Promptly adjust the audit work program to include tests that address the newly identified control and notify the other audit team members of the change
- B. Proceed with the current audit work program because the engagement scope has already been finalized but plan to address the newly identified control as part of the follow up engagement
- C. Adjust the audit work program to account for the new control, but only with approval from the engagement supervisor
- D. Discuss the control with management of the area under review and seek their approval prior to including the control in the current audit engagement
Answer: C
NEW QUESTION # 151
Because of an abundance of high priority requests from management, an internal audit activity no longer has the resources to meet all of its commitments contained in the annual audit plan. Which of the following would be the best course of action for the chief audit executive to follow?
- A. Present a reassessment of the plan to the board and senior management for consideration.
- B. Reassess the plan and either cancel or divert resources away from the lowest priority activities.
- C. Continue with the plan and seek opportunities to adjust priorities and reallocate resources.
- D. Advise the board immediately and seek their support for additional resources to meet the needs of the plan.
Answer: A
NEW QUESTION # 152
Which of the following are key characteristics of enterprise risk management?
1. It considers risk in the formulation of strategy.
2. It applies risk management in some units of an entity.
3. It takes a portfolio view of risks throughout the enterprise.
4. It restricts the organization's ability to seize opportunities inherent in future events.
- A. 2 and 4 only
- B. 1 and 4 only
- C. 1 and 3 only
- D. 2 and 3 only
Answer: C
NEW QUESTION # 153
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