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IIA-CIA-Part2 exam is a comprehensive exam that covers a broad range of topics. IIA-CIA-Part2 exam includes 100 multiple-choice questions that are designed to test the candidate's understanding of the key concepts in internal auditing. IIA-CIA-Part2 exam is divided into four sections: governance and risk management, conducting internal audit engagements, business acumen, and information security. IIA-CIA-Part2 exam is designed to be challenging, and candidates are required to demonstrate their knowledge of the subject matter to pass.
IIA-CIA-Part2 certification is widely recognized in the industry and is highly valued by employers. Practice of Internal Auditing certification is designed for professionals who are seeking to advance their careers in internal auditing, risk management, and compliance. Practice of Internal Auditing certification exam is rigorous and requires a significant amount of preparation. However, candidates who successfully pass the exam can enjoy a range of benefits, including increased job opportunities, higher salaries, and greater credibility in the industry.
NEW QUESTION # 248
An internal auditor compares real-time gasoline production data to corresponding final gasoline production reports and finds minor but consistent daily discrepancies. If the auditor is concerned about theft, which of the following next steps is most consistent with IIA guidance?
- A. Contact security personnel as evidence suggests gasoline is being stolen from production premises.
- B. Review the processes used to collect the production data and to compile the final production reports.
- C. Confront the production manager and ask her to explain the differences between real-time and reported data.
- D. Reconcile online data and the final production reports to gasoline sales reports.
Answer: B
NEW QUESTION # 249
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. Verify that none of the audit team worked for the foreign subsidiary within the last year to ensure independence.
- D. Agree, in writing, with the subsidiary's senior management regarding the scope of the engagement.
Answer: C
Explanation:
Section: Volume C
NEW QUESTION # 250
Due to price risk from the foreign currency purchase of aviation fuel, an airliner has purchased forward contracts to hedge against fluctuations in the exchange rate. When recalculating the exchange losses from individual purchases of jet fuel, which of the following details does the internal auditor need to validate?
1. The hedge documentation designating the hedge.
2. The spot exchange rate on the transaction date.
3. The terms of the forward contract.
4. The amount of fuel purchased.
- A. 1 and 2
- B. 1 and 4
- C. 3 and 4
- D. 2 and 3
Answer: D
Explanation:
When recalculating exchange losses from foreign currency purchases, the internal auditor needs to validate the spot exchange rate on the transaction date (2) and the terms of the forward contract (3). These details are crucial to accurately assess the financial impact and ensure that the hedge is effectively mitigating the exchange rate risk. References: = IIA's Practice Guide: "Auditing Derivatives" and IIA Standard 1220 - Due Professional Care.
NEW QUESTION # 251
The internal auditor of a bank has developed a multiple regression model which has been used for a number of years to estimate the amount of interest income from commercial loans. During the current year, the auditor applies the model and discovers that the R2 value has decreased dramatically, but that the model otherwise seems to be working correctly. Which of the following conclusions is justified by the change?
- A. Some new factors, not included in the model, are causing interest income to change.
- B. Changing to a cross-sectional regression analysis should cause the R2 to increase.
- C. A linear regression analysis would increase the model's reliability.
- D. Regression analysis is no longer an appropriate technique to estimate interest income.
Answer: A
NEW QUESTION # 252
Which of the following is the first step in the process where auditors and clients work together to evaluate the clients' system of internal control?
- A. Assess risks.
- B. Develop questionnaires.
- C. Identify objectives.
- D. Identify and assess controls.
Answer: C
Explanation:
Section: Volume B
NEW QUESTION # 253
In forming a team to investigate an organization's potential adoption of an activity-based costing system, the best reason to include an internal auditor on the team would be the auditor's knowledge of:
- A. Internal control alternatives.
- B. Information processing procedures.
- C. Current product cost structures.
- D. Activities and cost drivers.
Answer: A
NEW QUESTION # 254
An IT auditor is reviewing the access controls in an organization's accounting application. The auditor intends to deploy a tool that can help test the logical controls embedded in the system to ensure employee access is granted according to need. Which of the following would help achieve this objective?
- A. Audit expert systems.
- B. Utility software
- C. integrated test facility
- D. Generalized audit software
Answer: D
NEW QUESTION # 255
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. Assists audit management in planning by more effectively allocating the senior auditor to appropriate audits.
- C. Allows audit management to explain the criteria that will be used to evaluate the senior auditor's performance.
- D. Enables audit management to outline its quality assurance and improvement program with the senior auditor.
Answer: B
NEW QUESTION # 256
According to MA guidance, which of the following factors should an internal auditor consider when assessing the likelihood of fraud risk1?
- A. The potential and realized financial impacts
- B. The effect on the organization's reputation
- C. Past fraud allegations and actual occurrences
- D. Any potential damage to the organization's relationship with customers.
Answer: C
Explanation:
According to MA (Management Accounting) guidance and internal auditing standards, when assessing the likelihood of fraud risk, internal auditors should consider historical data and patterns within the organization.
Past fraud allegations and actual occurrences provide valuable insights into potential vulnerabilities and areas where controls might have previously failed. This historical perspective helps in evaluating the current fraud risk environment and in identifying areas that require stronger controls or more vigilant monitoring.
References:
* IIA Practice Guide: "Assessing the Risk of Fraud"
* COSO (Committee of Sponsoring Organizations of the Treadway Commission) Fraud Risk Management Guide
NEW QUESTION # 257
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 should have considered whether the information in the board report was compiled efficiently.
- B. Four quarters is not a large enough sample on which to base a conclusion.
- C. The auditor should have included the scratch paper in the workpapers.
- D. The auditor's workpapers are not sufficient to facilitate an efficient review of the auditor's work.
Answer: D
NEW QUESTION # 258
According to IIA guidance, which of the following strategies would add the least value to the achievement of the internal audit activity's (IAA's) objectives?
- A. Establish a format and frequency for IAA reporting that is appropriate and aligns with the organization's governance structure.
- B. Align organizational activities to internal audit activities and measure according to the approved IAA performance measures.
- C. Establish a periodic review of monitoring and reporting processes to help ensure relevant IAA reporting.
- D. Use the results of IAA engagement and advisory reporting to guide current and future internal audit activities.
Answer: B
NEW QUESTION # 259
According to IIA guidance,when performing a compliance audit of data security standards for a large e- commerce retailer, which of the following would represent the least likely area of risk exposure?
- A. Physical security risks.
- B. Operational risks.
- C. Access risks.
- D. Change or configuration risks.
Answer: A
Explanation:
Section: Volume D
NEW QUESTION # 260
When interrogating an individual who is suspected of fraud, it is appropriate to:
- A. Discontinue questioning once the individual has confessed to the fraud.
- B. Prepare a list of questions prior to the interrogation and strictly adhere to the list.
- C. Tell the individual that any information disclosed in the interrogation will not be disclosed outside of the company.
- D. Start the interview with questions to which the interviewer already knows the answer.
Answer: D
NEW QUESTION # 261
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. 1 and 2 only
- B. 1, 3, and 4 only
- C. 2 and 4 only
- D. 1 and 3 only
Answer: D
NEW QUESTION # 262
According to IIA guidance, which of the following is most likely to become part of the engagement work program?
- A. Information obtained from historic audits and memos.
- B. Risk and control registers or matrices.
- C. Resource deployment plans and sampling methodologies.
- D. Prior findings and management responses.
Answer: C
Explanation:
Step-by-Step Detailed Explanation:
A . Information obtained from historic audits and memos:
Useful for context but not typically part of the formal work program.
B . Risk and control registers or matrices:
Used in the planning phase but not part of the detailed execution in the work program.
C . Resource deployment plans and sampling methodologies:
Correct. These are essential components of the work program, guiding audit execution and resource allocation.
D . Prior findings and management responses:
Inform planning but do not typically appear in the work program itself.
CIA Exam Syllabus Reference:
Domain V: Performing Internal Audit Services - Engagement Work Program.
NEW QUESTION # 263
Which of the following would have the least impact (either positive or negative) on an assessment of a department's control environment?
- A. Many department functions were duplicated or verified by other department employees as part of the department's normal procedures.
- B. Audit tests designed to verify compliance with control procedures detected a general failure to follow standard procedures for transaction authorization.
- C. The department manager sets a tone of honesty and integrity in all business dealings and this tone is emulated by department personnel.
- D. The department managed long-term investments, including investment in derivatives and other financial instruments, to maximize return.
Answer: D
NEW QUESTION # 264
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. Assess the adequacy of the action plan and monitor key dates and deliverables.
- B. Reassign information systems auditors to assist the information technology department in correcting the weaknesses.
- C. Schedule a follow-up audit engagement to assess the status of corrective action.
- D. Evaluate statistics related to unplanned system outages, unauthorized access attempts, and denials of service to assess the effectiveness of corrections.
Answer: A
Explanation:
Section: Volume B
NEW QUESTION # 265
In order to obtain background information on an assigned audit of data center operations an internal auditor administers control questionnaires to select individuals who have primary responsibilities within the process. Which of the following is a drawback of this approach?
- A. This approach does not help the auditor learn about the existence of controls
- B. Information on control functionality is limited
- C. It takes the auditor a long time to assess the relevant controls using this approach
- D. It will be difficult to quantify the information obtained through this approach
Answer: B
Explanation:
Administering control questionnaires to individuals with primary responsibilities in the process can yield valuable information about processes and controls. However, one significant drawback is that the information gathered may be limited regarding the actual functionality of the controls. This approach relies on the respondents' knowledge and perceptions, which may not accurately reflect the effectiveness of the controls in practice. Moreover, respondents might not fully understand the auditor's intentions or may provide biased or incomplete information, thereby limiting the depth of insights into how controls function in real-world scenarios.
Reference:
IIA Standard 2201: Planning Considerations
IIA Practice Guide: Assessing the Adequacy of Risk Management Processes
NEW QUESTION # 266
During an audit of the accounts receivable (AR) process, an internal auditor noted that reconciliations are still not performed regularly by the AR staff, a recommendation that was made following a previous audit.
Monitoring by the financial reporting function has failed to detect the shortcoming. Both the financial reporting function and AR report to the controller, who is responsible for implementing action plans. Which of the following supports the internal auditor's decision to combine both observations into one reported finding?
- A. The observation relates to the same control activity within a common process.
- B. The observation has a common control, and it was noted in a prior audit.
- C. The observation was made during the same audit, and the action plan has a common owner.
- D. The observation has a common process, and the action plan for the observation has a common owner.
Answer: D
NEW QUESTION # 267
Which of the following is the best approach for obtaining feedback from engagement clients regarding the quality of internal audit work?
- A. Ask questions during the exit interviews and send copies of the documented responses to the clients.
- B. Call engagement clients after the exit interviews and send copies of the documented responses to the clients.
- C. Provide questionnaires to engagement clients at the beginning of each engagement and request that the clients complete and return them after the engagements.
- D. Distribute questionnaires to selected engagement clients shortly before preparing the internal audit annual activity report.
Answer: C
NEW QUESTION # 268
An internal auditor is assessing the organization's risk management framework. Which of the following formulas should he use to calculate the residual risk?
A) B)
C)
D)
- A. Option D
- B. Option A
- C. Option B
- D. Option C
Answer: C
NEW QUESTION # 269
An internal auditor for a regional bank suspects that the head of commercial lending has been granting loans without the required collateral Which of the following sampling techniques will be most effective for investigating the auditor's suspicion?
- A. Dollar-unit sampling
- B. Discovery sampling
- C. Variables sampling
- D. Judgmental sampling
Answer: B
NEW QUESTION # 270
According to IIA guidance, which of the following are the most important objectives for helping to ensure the appropriate completion of an engagement?
1. Coordinate audit team members to ensure the efficient execution of all engagement procedures.
2. Confirm engagement workpapers properly support the observations, recommendations, and conclusions.
3. Provide structured learning opportunities for engagement auditors when possible.
4. Ensure engagement objectives are reviewed for satisfactory achievement and are documented properly.
- A. 1, 2, and 4
- B. 1, 3, and 4
- C. 1, 2, and 3
- D. 2, 3, and 4
Answer: A
Explanation:
Section: Volume E
NEW QUESTION # 271
An IT auditor is reviewing the access controls in an organization's accounting application. The auditor intends to deploy a tool that can help test the logical controls embedded in the system to ensure employee access is granted according to need. Which of the following would help achieve this objective?
- A. Audit expert systems.
- B. Utility software
- C. integrated test facility
- D. Generalized audit software
Answer: D
Explanation:
Generalized audit software (GAS) is designed to assist auditors in performing data analysis and testing the logical controls embedded within information systems. This type of software can help an IT auditor review access controls by analyzing user permissions, access logs, and other relevant data to ensure that access is granted according to the principle of least privilege and organizational policies. GAS tools are versatile and can handle large volumes of data, making them suitable for testing logical controls in an accounting application.
Reference:
The Institute of Internal Auditors (IIA) - Global Technology Audit Guide (GTAG) 1: Information Technology Controls
NEW QUESTION # 272
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