Get IIA-CIA-Part2 Exam Dumps (V16.03) – The Best Preparation Resource for CIA Exam Part Two: Practice of Internal Auditing Exam Learning

1. An internal auditor accessed accounts payable records and extracted data related to fuel purchased tor the organization's vehicles As a first step, she sorted the data by vehicle and used spreadsheet functions to identify all instances of refueling on the same or sequential dates She then performed other tests.

Based on the auditor's actions which of the following is most likely the objective of this engagement1?

2. An internal auditor tested whether purchase orders were supported by appropriately approved purchase requisitions She sampled a population of purchase documents and identified instances where purchase requisitions were missing However, she did not notice that n some cases purchase requisitions were approved by an unauthorized person.

Which of the following risks most appropriately describes this situation?

3. An internal auditor submitted a report containing recommendations for management to enhance internal controls related to investments.

To follow up, which of the following is the most appropriate action for the internal auditor to take?

4. A chief audit executive (CAE) reviews the supervision of an internal audit engagement.

Which of the following would most likely assure the CAE that the engagement had adequate supervision?

5. A corporate merger decision prompts the cruel audit executive (CAE) to propose interim changes lo the existing annual audit plan to account for emerging risks.

When of the following is the most appropriate action for the CAE to take regarding the changes made to the audit plan?

6. Which of the following statements regarding the risk management process' support of the internal audit activity is true?

7. Which of the following internal control attributes should internal auditors consider testing during a review of the board of directors?

8. When forming an opinion on the adequacy of management's systems of internal control, which of the following findings would provide the most reliable assurance to the chief audit executive?

• During an audit of the hiring process in a law firm, it was discovered that potential employees' credentials were not always confirmed sufficiently. This process remained unchanged at the following audit.

• During an audit of the accounts payable department, auditors calculated that two percent of accounts were paid past due. This condition persisted at a follow up audit.

• During an audit of the vehicle fleet of a rental agency, it was determined that at any given time, eight percent of the vehicles were not operational. During the next audit, this figure had increased.

• During an audit of the cash handling process in a casino, internal audit discovered control deficiencies in the transfer process between the slot machines and the cash counting area. It was corrected immediately.

9. Which of the following statement is consistent with IIA guidance the use of mentoring for internal auditors?

10. According to an internal audit observation, the organization’s rules of record management require all contracts to be registered and stored in a specific electronic system. One subsidiary has thousands of client contracts on paper, which are kept in the office because there are not enough assistants to scan the contracts into the system.

Which of the following component should be added to this observation?

11. Communicate to senior management a summary report on the status and adequacy of audit resources.

12. 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?

13. Which of the following is the primary reason the chief audit executive should consider the organization's strategic plans when developing the annual audit plan?

14. An internal auditor wants to compare performance information from one quarter to another.

Which analytics procedure would the auditor use?

15. An internal auditor wants to identity potential ghost employees in the organization's payroll system.

The auditor extracts the following data

- Human resources data with employees' names addresses employment conditions and identification codes

- Payroll data

- Logs from entrance systems

With this data, which of the following types of ghost employees will the auditor be able to identify?

16. Which of the following items, included in the preliminary audit communication would be most useful for management to formulate action plans in response to audit recommendations?

17. Which of the following statements about assurance maps is correct?

18. When me internal audit activity does not have sufficient time to complete its usual root cause analysis which c4 the following is most appropriate?

19. Which of the following manual audit approaches describes testing the validity of a document by following it backward to a previously prepared record?

20. Which of the following best illustrates the primary focus of a risk-based approach to control self-assessment?

21. If observed during fieldwork by an internal auditor, which of the following activities is least important to communicate formally to the chief audit executive?

22. Which of the following should management action plans include at a minimum?

23. During a fraud interview, it was discovered that unquestioned authority enabled a vice president to steal funds from the organization.

Which of the following best describes this condition?

24. What is the primary objective of an engagement supervisor's review of key activities performed during the engagement?

25. Which of the following would most likely cause an internal auditor to consider adding fraud work steps to the audit program?

26. What is the best course of action for a chief audit executive if an internal auditor identifies in the early stage of an audit that some employees have inappropriate access to a key system?

27. Which of the following statements generally true regarding audit engagement planning?

28. An internal auditor is analyzing sates records and is concerned whether a transaction is recorded in the coned period. The accounting manager explains that the external auditor approved the records and produces an email from the external audit team leader.

How should tie internal auditor respond?

29. A chief audit executive (CAE) is trying to balance the internal audit activity's needs for technical audit skills budget efficiency and staff development opportunities.

Which of the following would best assist the CAE in achieving this balance1?

30. According to IIA guidance which of the following statements is true regarding the annual audit plan?

31. Which of the following is an appropriate documentation of proper engagement supervision?

32. Submit management's plan of action to the external auditors for additional review.

33. At a construction company, an internal auditor is planning an audit of the company's process for designing and building grid connections.

The process involves customers making payments m three parts

• The first payment of 10% after approval of the customer s application

• The second payment of 70% prior to construction

• The third payment of 20% after construction is complete

Which of the following key controls should the auditor test to ensure that the company is not taking any unwanted credit risks?

34. 'Internal policy prohibits employees from entering into contacts with financial obligations without proper approval.

A project manager signed a change to an important service agreement without obtaining the proper approval As a result the organization is receiving $5,000 per month less for its services.’’

Which of the following should be added to the observation?

35. Management has taken immediate action to address an observation received during an audit of the organization's manufacturing process.

Which of the following is true regarding the validity of the observation closure?

36. An organization has a health and safety division that conducts audits to meet regulatory requirements. The chief health and safety officer reports directly to the CEO.

Which of the following describes an appropriate role for the chief audit executive (CAE) with regard to the organization's health and safety program?

37. The internal audit manager has been delegated the task of preparing the annual internal audit plan for the forthcoming fiscal year All engagements should be appropriately categorized and presented to the chief audit executive for review.

Which of the following would most likely be classified as a consulting engagement?

38. According to the IIA guidance, which of the following foes the engagement work test in a review in a review of an organization al process?

39. Upon concluding the engagement fieldwork an internal auditor discusses the audit findings with operational management.

There is a greater likelihood that the auditor will obtain a responsive action plan from management when both parties agree on which of the following attributes of the audit finding?

40. Which of the following is the best option for the chief audit executive to consider for effective coordination of assurance coverage?

41. As a result of server managements assumption of risk there is residual risk that exceeds me organisation's risk appetite.

Which of the following actions would be most appropriate for the chief audit executive to take?

42. An organization's board would like to establish a formal risk management function and has asked the chief audit executive (CAE) to be involved in the process.

According to IIA guidance, which of the following roles should the CAE not undertake?

43. The amount of fuel purchased.

44. Which of the following should be the focus of the effect section of the preliminary observations document?

45. An internal auditor completed a review of expenses related to the launch of a new project. The auditor sampled 45 transactions approved by a senior project manager and identified 30 with questionable vendor documentation.

Which of the following is the most appropriate conclusion for the auditor to include in the audit report?

46. During a consulting engagement an internal auditor wants to determine whether all principal stakeholders are involved in a project.

Which tool should the auditor use?

47. Which of the following would not be a typical activity for the chief audit executive to perform following an audit engagement?

48. According to IIA guidance, which of the following reflects a characteristic of sufficient and reliable information?

49. Is the documentation easily accessible to an persons who need in to perform their job?

Which of the following is a drawback of testing methods like this?

50. A toy manufacturer receives certain components from an overseas supplier and uses them to assemble final products Recently quality reviews have identified numerous issues regarding the components' compliance with mandatory quality standards.

Which type of engagement would be most appropriate to assess the root causes of the quality issues?

51. An internal auditor collected several employee testimonials.

Which of the following is the best action for the internal auditor to take before drawing a conclusion?

52. An organization recently acquired a subsidiary in a new industry, and management asked the chief audit executive (CAE) to perform a comprehensive audit of the subsidiary prior to recommencing operations. The CAE is unsure her team has the necessary skills and knowledge to accept the engagement According to IIAguidance, which of the following responses by the CAE would be most appropriate?

53. An internal auditor conducted interviews with several employees, documented the interviews analyzed the summaries, and drew a number of conclusions.

What sort of audit evidence has the internal auditor primarily obtained?

54. An audit observation states the following:

"Despite the rules of the organization there is no approved credit risk management policy in the subsidiary. The subsidiary is concluding contacts with clients who have very high credit ratings. The internal audit team tested 50 contacts and 17 showed clients with a poor credit history"

Which of the following components are missing in the observation?

55. A preliminary observation document contains more detail than tie observation description in the engagement workpapers

56. Which of the following recommendations made by the internal audit activity (IAA) is most likely to help prevent fraud?

57. Which of the following statements concerning workpapers is the most accurate?

58. In which of the following populations would the internal auditor most likely choose to use a stratified sampling approach?

59. An internal auditor is asked to review a recently completed renovation to a retail outlet.

Which of the following would provide the most reliable evidence that the completed work conformed to the plan?

60. A chief audit executive's report to the board showed a significant trend of recent aud4s going over planned budgeted hours.

Which of the following factors could cause this trend?

61. According to IIA guidance, which of the following statements best justifies a chief audit executive's request for external consultants to complement internal audit activity (IAA) resources?

62. An internal auditor suspects that employee turnover is unusually high at the organization's primary manufacturing plant.

To investigate this potential issue which of the following analytical approaches is the auditor likely to use?

63. Which of the following should be described in the recognition element of a typical internal audit repot?

64. According to IIA guidance which of the following statements is true regarding heat maps?

65. An internal auditor is examining the organization's internal control processes.

Which of the following would the auditor do to test the reliability of a customer database1?

66. An internal audit team leader is having difficulties completing the planning phase of an assurance engagement because the business unit lacks a system of internal controls.

Which of the following is the most appropriate course of action for the internal audit team leader?

67. The audit manager asked the internal auditor to perform additional testing because several irregularities were found in the financial information.

Which of the following would be the most appropriate analytical review for the auditor to perform?

68. An organization's finance manager plans to implement a state-of-the-art management system to better manage the organization's receivables. The finance manager consulted the chief audit executive (CAE) and asked for her assistance in determining whether the organization is able to accommodate this system.

How would the CAE proceed to determine the objectives of this engagement?

69. The final internal audit report should be distributed to which of the following individuals?

70. Which of the following statements is false regarding audit criteria?

71. An internal auditor is preparing for an auditor of newly implemented software that is used by 3,000 employees in South America and Europe.

What would be the best way for the auditor to gather relevant feedback?

72. During the fieldwork phase of an assurance engagement, the internal auditor decides that she wants to adjust the audit work program. Which of the following is the most appropriate next step for the auditor to take?

73. Which of the following factors would the auditor in charge be least likely to consider when assigning tasks to audit team members for an engagement?

74. Which of the following is the most important concept to be included in a consulting engagement agreement?

75. The board of directors expressed concerns about potential external risks that could impact the organization s ability to meet its annual objectives and goals The board requested consulting services from the internal audit activity to gain insight regarding the external risks.

Which of the following engagement objectives would be appropriate to fulfill this request?

76. The IAA frequently is involved in various project teams and task forces in an advisory capacity.