Latest IIA-CIA-Part2 Pass Guaranteed Exam Dumps with Accurate & Updated Questions
IIA-CIA-Part2 Exam Brain Dumps - Study Notes and Theory
IIA IIA-CIA-Part2 Exam Syllabus Topics:
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NEW QUESTION 176
Which of the following events would most likely cause the chief audit executive to consider changing the current year's audit plan?
The government announced that new regulatory requirements will be introduced in the coming years which may significantly impact the organization's primary product.
A major competitor unexpectedly introduced a new model at a lower price point to compete with the organization's market leading product.
The organization announced a new joint venture with a long time corporate partner to introduce a new product with development costs and sales beginning next fiscal year.
An equal joint venture partner filed a lawsuit against the organization and requested that the court issue an immediate suspension of future product shipments.
- A. 2 and 4 only
- B. 1 and 3 only
- C. 1 and 2 only
- D. 3 and 4 only
Answer: A
NEW QUESTION 177
An organization has acquired a new line of business. None of the organization's internal auditors have the required expertise to perform an internal audit of the new business line; therefore, the chief audit executive (CAE) has contracted the services of an external audit firm to perform the engagement. The CAE has assigned a member of the internal audit team to assist the external team with the engagement. According to the Standards, which of the following statements is true regarding supervision of the engagement?
- A. The CAE may rely upon the external firm's auditor in charge to supervise the engagement.
- B. The CAE is not responsible for the quality of an audit performed by an external firm.
- C. The external firm's auditor in charge must defer to the judgment of the CAE for any disputes.
- D. The CAE should not assign an inexperienced staff member to assist with the engagement.
Answer: C
NEW QUESTION 178
A chief audit executive agrees to conduct an engagement that will focus on customers' perceptions of the quality of the organization's products and services. Which of the following issues should be addressed first?
- A. Cost-effectiveness.
- B. Supplier deliveries.
- C. Customer complaints.
- D. Quality control.
Answer: C
NEW QUESTION 179
Which of the following is a weakness that is inherent in the use of the test data method to test internal controls in a computer-based accounting system?
- A. Inclusion of atypical data in the test data may cause errors to be noted on the exception report.
- B. Conditions that were not specifically considered by the auditor may go untested.
- C. The approach requires the creation of "dummy companies," possibly destroying or altering actual company data in the process.
- D. The auditor must test many transactions with the same condition in order to achieve assurance that the condition is being detected.
Answer: B
NEW QUESTION 180
Given the scarcity of internal audit resources, a chief audit executive (CAE) decides not to schedule a follow-up of audit recommendations when developing engagement work schedules. Why does the CAE's decision violate the Standards?
- A. Follow-up actions should take priority over new engagements in scheduling.
- B. Lack of resources is not a sufficient reason to forgo a follow-up.
- C. When resources are scarce, the follow-up can be incorporated into the next engagement.
- D. It is not the CAE's responsibility to establish a process for a follow-up.
Answer: B
NEW QUESTION 181
After issuance of the engagement final communication for an audit of an organization's accounts payable function, which of the following should be sent satisfaction surveys?
I.Manager of disbursements.
II.
Controller.
III.
Chief operating officer.
IV.
Audit committee members.
- A. I and II only.
- B. II, III, and IV only.
- C. I only.
- D. II and III only.
Answer: A
NEW QUESTION 182
The chief audit executive (CAE) of a multinational entity with highly automated and complex operations has just completed the update of the risk-based audit plan. Interviews with management revealed the introduction of new technology and a significant increase in both the number and severity of technology-based risk exposures. According to the International Professional Practices Framework, which of the following would be the best course of action for the CAE to undertake next?
- A. Evaluate whether appropriate skills and knowledge required to perform the necessary audit work currently exist in the department.
- B. Arrange for the outsourcing of some technology intensive audit processes and procedures based on the plan changes.
- C. Develop a detailed audit plan that makes the most efficient use and reallocation of existing internal audit resources.
- D. Begin planning to recruit information technology audit specialists and other expert personnel into the internal audit activity.
Answer: A
NEW QUESTION 183
The final engagement communication contains the following observation:
The internal auditor discovered that three of the 10 contracts reviewed failed to meet the organization's competitive bidding requirements Management explained that senior management deemed these purchases to be critical and awarded them as sole-source." Which of the following components is missing in the documentation of the observation?
- A. Condition
- B. Criteria.
- C. Cause
- D. Effect
Answer: D
NEW QUESTION 184
An appliance repair company is considering relocating the center that houses its service vehicles. An internal auditor wants to determine the potential reduction in average miles driven by the service vehicles if the center is relocated. Which of the following statistical sampling methods would be most appropriate for this test?
- A. Mean-per-unit sampling.
- B. Attributes sampling.
- C. Probability-proportional-to-size sampling.
- D. Discovery sampling.
Answer: A
Explanation:
Section: Volume A
NEW QUESTION 185
In a payroll audit, a staff auditor suspects that signatures on some of the documents being sampled for examination are not authentic. What action should the auditor take before proceeding with the examination?
- A. Discuss the suspicious documents with payroll staff to seek their views on the authenticity of the signatures.
- B. Keep the suspicious documents in the workpaper file until the end of the engagement, and then discuss the suspicions with the payroll manager.
- C. Suggest to the payroll manager that the suspicious documents should be sent to the organization's security department for forensic review.
- D. Review the suspicious documents with the chief audit executive and seek advice concerning further examination.
Answer: D
Explanation:
Section: Volume C
NEW QUESTION 186
The internal audit activity of an organization obtained approval to add a senior auditor to its staff. The chief audit executive, audit manager, and audit supervisor each will interview the candidates. According to the Standards, which of the following best explains the involvement of management in the interview process?
- A. Provides audit management with the opportunity to communicate expectations regarding ethical behavior standards.
- B. Allows audit management to explain the criteria that will be used to evaluate the senior auditor's performance.
- C. Enables audit management to outline its quality assurance and improvement program with the senior auditor.
- D. Assists audit management in planning by more effectively allocating the senior auditor to appropriate audits.
Answer: D
Explanation:
Section: Volume C
NEW QUESTION 187
Controls are implemented to:
- A. Eliminate risk and reduce the potential for loss.
- B. Mitigate risk and eliminate the potential for loss.
- C. Mitigate risk and reduce the potential for loss.
- D. Eliminate risk and eliminate potential for loss.
Answer: C
Explanation:
Section: Volume D
NEW QUESTION 188
An audit client responded to recommendations from a recent consulting engagement. The client indicated that several recommended process improvements would not be implemented. Which of the following actions should the internal audit activity take in response?
- A. Initiate an assurance engagement on the unresolved issues.
- B. Confirm the decision with management and document this decision in the audit file.
- C. Document the issue in the audit file and follow up until the issues are resolved.
- D. Escalate the unresolved issues to the board, because they could pose significant risk exposures to the organization.
Answer: B
Explanation:
Section: Volume E
NEW QUESTION 189
When establishing the internal audit activity's annual plan, which of the following would be the best source of potential audit engagement topics?
- A. Recent changes in management objectives.
- B. Operations involving cash transactions.
- C. Risk factors utilized in the organization's risk models.
- D. The organization's budget.
Answer: A
Explanation:
Section: Volume D
NEW QUESTION 190
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
NEW QUESTION 191
According to the International Professional Practices Framework, which of the following is correct regarding conducting and reporting follow-up activities by the internal audit activity (IAA)?
- A. Management has stopped implementing several key recommendations citing a growing disagreement with their effectiveness. The auditor communicates the situation to the CAE who then escalates the matter to senior management.
- B. Due to management changes, the IAA is advised by management that no further work will be done. Further follow-up work is not required as management has accepted the related risk.
- C. In situations where the identified risk may have a significant impact to the business and senior management has accepted the risk, it is not necessary for the CAE to inform the board of the decision.
- D. A newly appointed auditor immediately proceeds to conduct follow-up testing based on previous work performed for the engagement and then reports the results to the chief audit executive (CAE).
Answer: A
Explanation:
Section: Volume D
NEW QUESTION 192
For which of the following fraud engagement activities would it be most appropriate to involve a forensic auditor?
- A. Assessing contracts for relevant terms and conditions.
- B. Independently evaluating conflicts of interests.
- C. Preparing evidentiary documentation.
- D. Performing statistical analysis for data anomalies.
Answer: C
NEW QUESTION 193
An internal auditor notes that employees continue to violate segregation-of-duty controls in several areas of the finance department, despite previous audit recommendations. Which of the following recommendations is the most appropriate to address this concern?
- A. Recommend that management address these concerns immediately.
- B. Recommend rotating finance staff in this area.
- C. Recommend additional segregation-of-duty reviews.
- D. Recommend appropriate awareness training for all finance department staff.
Answer: D
Explanation:
Section: Volume E
NEW QUESTION 194
An auditor plans to analyze customer satisfaction, includinG.(1) customer complaints recorded by the customer service department during the last three months; (2)
merchandise returned in the last three months; and (3) responses to a survey of customers who made purchases in the last three months. Which of the following statements regarding this audit approach is correct?
- A. The survey would not consider customers who did not make purchases in the last three months.
- B. Although useful, such an analysis does not address any risk factors.
- C. Analysis of three months' activity would not evaluate customer satisfaction.
- D. Steps 1 and 2 of the analysis are not necessary or cost-effective if the customer survey is comprehensive.
Answer: A
NEW QUESTION 195
An internal auditor is evaluating controls over the purchasing function. The function includes the material control department, the purchasing department, and the receiving department. Which of the following is true regarding the presentation of the process flow among the three departments?
- A. A horizontal flowchart, with the departments described across the top and the process flowing horizontally, would be most useful.
- B. A vertical flowchart of each department, showing inputs at the top and outputs at the bottom, would be most useful.
- C. Flowcharts are not useful for documenting process flow.
- D. Both a flowchart and narratives are needed due to the number of departments involved.
Answer: A
NEW QUESTION 196
A company used simple regression analysis to analyze maintenance costs against machine hours (MH) for a 26-week period when the plant was in full operation. The regression yielded the following estimated cost function:
Maintenance Cost = $60 + $0.25/MH
The regression analysis also generated a coefficient of determination (R2), or goodness of fit, of
0.85. Which of the following statements regarding this regression analysis is appropriate?
- A. This regression can be used to determine the maintenance cost for any period at any activity level by substituting the machine hours in the equation.
- B. The $60 component represents the best estimate of fixed maintenance costs for the company in a shutdown situation.
- C. The $0.25 component is the slope coefficient of the cost estimate and represents the average variable maintenance cost per machine hour.
- D. The coefficient of determination of R2 = 0.85 indicates that the goodness of fit is poor because the value is close to the maximum value of one.
Answer: C
NEW QUESTION 197
A bakery chain has a statistical model that can be used to predict daily sales at individual stores based on a direct relationship to the cost of ingredients used and an inverse relationship to rainy days. What conditions would an internal auditor look for as an indicator of employee theft of food from a specific store?
- A. Both total sales and cost of ingredients used are greater than expected.
- B. On a sunny day, total sales are less than expected when compared to the cost of ingredients used.
- C. On a rainy day, total sales are greater than expected when compared to the cost of ingredients used.
- D. Both total sales and cost of ingredients used are less than expected.
Answer: B
Explanation:
Section: Volume C
NEW QUESTION 198
An auditor plans to analyze customer satisfaction, including: (1) customer complaints recorded by the customer service department during the last three months; (2) merchandise returned in the last three months; and (3) responses to a survey of customers who made purchases in the last three months. Which of the following statements regarding this audit approach is correct?
- A. The survey would not consider customers who did not make purchases in the last three months.
- B. Although useful, such an analysis does not address any risk factors.
- C. Analysis of three months' activity would not evaluate customer satisfaction.
- D. Steps 1 and 2 of the analysis are not necessary or cost-effective if the customer survey is comprehensive.
Answer: A
NEW QUESTION 199
Which of the following is typically not a reason for committing financial statement fraud?
- A. To receive performance-related bonuses.
- B. To obtain more favorable terms on financing.
- C. To disguise a duplicate payment to a vendor.
- D. To dispel negative market perception.
Answer: C
Explanation:
Section: Volume B
NEW QUESTION 200
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