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NEW QUESTION 209
Which of the following factors would not be considered in determining appropriate follow-up procedures?
- A. The availability of funds in the audited department's budget to correct the reported condition.
- B. The potential consequences if the corrective action fails.
- C. The significance of the audit finding.
- D. The effort and cost needed to correct the reported condition.
Answer: A
Explanation:
Section: Volume C
NEW QUESTION 210
Which of the following is an effective approach for internal auditors to take to improve collaboration with audit clients during an engagement?
1. Obtain control concerns from the client before the audit begins so the internal auditor can tailor the scope accordingly.
2. Discuss the engagement plan with the client so the client can understand the reasoning behind the approach.
3. Review test criteria and procedures where the client expresses concerns about the type of tests to be conducted.
4. Provide all observations at the end of the audit to ensure the client is in agreement with the facts before publishing the report.
- A. 1 and 2 only
- B. 3 and 4 only
- C. 2 and 3 only
- D. 1 and 4 only
Answer: A
Explanation:
Section: Volume E
NEW QUESTION 211
Which of the following would be included in an internal audit department's quality assurance and improvement program?
1. Ongoing internal assessments of the performance of the internal audit department.
2. Periodic internal reviews through self-assessments.
3. Assessments conducted by a qualified external reviewer at least once every five years.
- A. 1 only
- B. 2 and 3 only
- C. 1 and 2 only
- D. 1, 2, and 3
Answer: D
Explanation:
Section: Volume D
NEW QUESTION 212
In a client satisfaction survey for an internal audit engagement, client management should be asked to assess which of the following factors?
I. Audit team's knowledge of the audited area.
II. Usefulness of the audit results.
III. Quality of management of the internal audit activity.
IV.
Clarity of the scope and objectives of the audit engagement.
- A. I and II only
- B. I, III, and IV only
- C. I, II, and IV only
- D. II and IV only
Answer: C
NEW QUESTION 213
A chief audit executive (CAE) has decided to add an engagement to the current audit plan which will exceed available audit resources. Which of the following is the best course of action for the CAE to take?
- A. Present the plan change to senior management and request additional resources before going to the board of directors.
- B. Add this change to the plan and request senior management to indicate which other engagement should be deleted to keep the overall plan within resource constraints.
- C. Seek approval from senior management and the board of directors for the plan change and advise them of the issue of limited resources.
- D. Immediately seek additional resources from senior management and the board of directors to meet the needs of the organization.
Answer: C
Explanation:
Section: Volume C
Explanation
NEW QUESTION 214
An internal auditor would most likely use attributes sampling when testing which of the following?
- A. Year-end inventory value.
- B. Correct coding of accounts payable disbursement vouchers.
- C. Fixed asset book value.
- D. Accounts receivable balances.
Answer: B
NEW QUESTION 215
During a systems development audit, software developers indicated that all programs were moved from the development environment to the production environment and then tested in the production environment. What should the auditor recommend?
I. Implement a test environment to ensure that testing is not performed in the production environment.
II. Require developers to move modified programs from the development environment to the test environment and from the test environment to the production environment.
III.
Eliminate access by developers to the production environment.
- A. I and III only
- B. I and II only
- C. III only
- D. I only
Answer: A
NEW QUESTION 216
Which of the following recommendations made by the internal audit activity (IAA) is most likely to help prevent fraud?
- A. A vacation policy compliance review found that employees frequently leave on vacation before their leave applications are signed by their manager. The IAA recommends that the manager attend to the leave applications in a more timely fashion.
- B. A review of customer service-level agreements found that orders to several customers are frequently delivered late. The IAA recommends that the organization extend the expected delivery time advertised on its website.
- C. A review of internal service-level agreement compliance in financial services found that requests for information frequently are fulfilled up to two weeks late. The IAA recommends that the financial services unit be eliminated for its ineffectiveness.
- D. A review of password policy compliance found that employees frequently use the same password more than once during a year. The IAA recommends that the access control software reject any password used more than once during a 12-month period.
Answer: D
Explanation:
Section: Volume E
NEW QUESTION 217
Which of the following would be the most effective method to prevent installation of new equipment that does not meet environmental permit requirements, or to prevent modification of current processes in such a way that they no longer meet permit requirements?
- A. Require that the staff of the environmental compliance department attend monthly safety meetings in different parts of the facility so that they can hear directly from the workers about any changes.
- B. Require that the environmental compliance department perform regular inspections of the manufacturing facility to identify new equipment or process modifications in progress.
- C. Include the environmental compliance department in the review of proposed process changes and equipment purchases affecting permit requirements.
- D. Rely on annual inspections by various regulatory agencies to identify equipment or processes that require a permit.
Answer: C
Explanation:
Section: Volume B
NEW QUESTION 218
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. I, II, and IV only.
- B. I and III only.
- C. I, II, III, and IV.
- D. II and IV only.
Answer: A
NEW QUESTION 219
According to the International Professional Practices Framework, the responsibility for establishing and maintaining a system to monitor the disposition of results communicated to management falls upon:
- A. Compliance officer.
- B. Chief audit executive.
- C. Risk manager.
- D. Senior management.
Answer: B
NEW QUESTION 220
Which of the following is a justifiable reason for omitting advance client notice when planning an audit engagement?
- A. Previous management action plans addressing prior internal audit recommendations remain incomplete.
- B. Advance notice may result in management making corrections to reduce the number of potential deficiencies.
- C. The audit engagement has already been communicated and approved through the annual audit plan.
- D. The engagement includes audit assurance procedures such as sensitive or restricted asset verifications.
Answer: D
Explanation:
Section: Volume E
NEW QUESTION 221
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. Suggest to the payroll manager that the suspicious documents should be sent to the organization's security department for forensic review.
- B. Discuss the suspicious documents with payroll staff to seek their views on the authenticity of the signatures.
- C. Review the suspicious documents with the chief audit executive and seek advice concerning further examination.
- D. Keep the suspicious documents in the workpaper file until the end of the engagement, and then discuss the suspicions with the payroll manager.
Answer: C
Explanation:
Section: Volume C
NEW QUESTION 222
Which of the following statements is true?
- A. Internal audit's responsibility for an assurance engagement observation ends when management implements changes to remediate the observation.
- B. If management chooses not to take action on internal audit's assurance engagement observation, the chief audit executive (CAE) has a responsibility to propose an action plan to the board.
- C. An assurance engagement observation is considered remediated when management's corrective action plan is approved by the board.
- D. When management decides to accept the risk of not taking action on an assurance observation, the (CAE) is responsible for judging whether or not that decision is prudent.
Answer: D
NEW QUESTION 223
An internal auditor found that the cost of some material installed on capital projects had been transferred to the inventory account because the capital budget had been exceeded. Which of the following would be an appropriate technique for the auditor to use to determine the extent of the problem?
- A. Analyze a sample of capital transactions each quarter to detect instances in which installed material was transferred to inventory.
- B. Review all journal entries that transferred costs from capital to inventory accounts.
- C. Identify variances between amounts capitalized each month and the capital budget.
- D. Compare inventory receipts with debits to the inventory account and investigate discrepancies.
Answer: B
Explanation:
Section: Volume B
NEW QUESTION 224
Senior management of an organization has requested that the internal audit activity provide ongoing internal control training for all managerial personnel. This is best addressed by:
- A. An operational assurance engagement.
- B. An informal consulting engagement.
- C. A formal consulting engagement.
- D. A performance assurance engagement.
Answer: C
NEW QUESTION 225
Which of the following methods would an auditor most likely use to document a complex sales order process?
- A. Develop a horizontal flowchart, with supporting documentation for key control points.
- B. Perform a process review, assigning time and cost to each step of the process to develop a hierarchy flowchart.
- C. Create a critical path method chart, noting the processes involved for each step.
- D. Utilize a systems narrative, which can be updated during subsequent audits.
Answer: A
NEW QUESTION 226
In which of the following cases is it appropriate for an audit report to not contain management's response either within the report or as an attachment?
- A. There was insufficient time to obtain management's response during the draft reporting process.
- B. Internal controls were found to be properly designed and operating effectively although operations are deemed inefficient.
- C. Management's response to an audit report is generally not a requirement.
- D. An internal audit report contains no observations.
Answer: D
NEW QUESTION 227
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