According to IIA guidance, which of the following is true regarding audit supervision?
1.
Supervision should be performed throughout the planning, examination, evaluation, communication, and follow-up stages of the audit engagement.
2.
Supervision should extend to training, time reporting, and expense control, as well as administrative matters.
3.
Supervision should include review of engagement workpapers, with documented evidence of the review.
A. 1 and 2 only
B. 1 and 3 only
C. 2 and 3 only
D. 1, 2, and 3
Which of the following best describes the four components of a balanced scorecard?
A. Customers, innovation, growth, and internal processes.
B. Business objectives, critical success factors, innovation, and growth.
C. Customers, support, critical success factors, and learning.
D. Financial measures, learning and growth, customers, and internal processes.
Which of the following behaviors could represent a significant ethical risk if exhibited by an organization's board?
1.
Intervening during an audit involving ethical wrongdoing.
2.
Discussing periodic reports of ethical breaches.
3.
Authorizing an investigation of an unsafe product.
4.
Negotiating a settlement of an employee claim for personal damages.
A. 1 and 2
B. 1 and 4
C. 2 and 3
D. 3 and 4
Which of the following evaluation criteria would be the most useful to help the chief audit executive determine whether an external service provider possesses the knowledge, skills, and other competencies needed to perform a review?
A. The financial interest the service provider may have in the organization.
B. The relationship the service provider may have had with the organization or the activities being reviewed.
C. Compensation or other incentives that may be applicable to the service provider.
D. The service provider's experience in the type of work being considered.
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. 1 and 2 only
B. 2 and 4 only
C. 1, 2, and 4
D. 2, 3, and 4
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?
A. The CAE has no role to play, because the chief health and safety officer reports to a senior executive.
B. The CAE should coordinate with, and review the work of, the chief health and safety officer to gain an understanding of whether risks related to health and safety are managed properly.
C. The CAE should give periodic reports directly to the regulator regarding health and safety issues, as it is the appropriate regulatory oversight body.
D. The CAE should hire an independent external specialist to conduct an annual assessment and provide assurance over the effectiveness of the health and safety program and the reliability of its reports.
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?
A. Strategic plans reflect the organization's business objectives and overall attitude toward risk.
B. Strategic plans are helpful to identify major areas of activity, which may direct the allocation of internal audit activity resources.
C. Strategic plans are likely to show areas of weak financial controls.
D. The strategic plan is a relatively stable document on which to base audit planning.
An internal auditor wants to determine whether employees are complying with the information security policy, which prohibits leaving sensitive information on employee desks overnight. The auditor checked a sample of 90 desks and found eight that contained sensitive information. How should this observation be reported, if the organization tolerates 4 percent noncompliance?
A. The matter does not need to be reported, because the noncompliant findings fall within the acceptable tolerance limit.
B. The deviations are within the acceptable tolerance limit, so the matter only needs to be reported to the information security manager.
C. The incidents of noncompliance fall outside the acceptable tolerance limit and require immediate corrective action, as opposed to reporting.
D. The incidents of noncompliance exceed the tolerance level and should be included in the final engagement report.
During an assurance engagement, an internal auditor discovered that a sales manager approved numerous sales contracts for values exceeding his authorization limit. The auditor reported the finding to the audit supervisor, noting that the sales manager had additional new contracts under negotiation. According to IIA guidance, which of the following would be the most appropriate next step?
A. The audit supervisor should include the new contracts in the finding for the final audit report.
B. The audit supervisor should communicate the finding to the supervisor of the sales manager through an interim report.
C. The audit supervisor should remind the sales manager of his authority limit for the contracts under negotiation.
D. The auditor should not reference the new contracts, because they are not yet signed and therefore cannot be included in the final report.
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. Integrity.
B. Flexibility.
C. Initiative.
D. Curiosity.
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