An internal control questionnaire would be most appropriate in which of the following situations?
A. Testing controls where operating procedures vary.
B. Testing controls in decentralized offices.
C. Testing controls in high risk areas.
D. Testing controls in areas with high control failure rates.
It is close to the fiscal year end for a government agency, and the chief audit executive (CAE) has the following items to submit to either the board or the chief executive officer (CEO) for approval. According to IIA guidance, which of the following items should be submitted only to the CEO?
A. The internal audit risk assessment and audit plan for the next fiscal year.
B. The internal audit budget and resource plan for the coming fiscal year.
C. A request for an increase of the CAE's salary for the next fiscal year.
D. The evaluation and compensation of the internal audit team.
The chief audit executive of a medium-sized financial institution is evaluating the staffing model of the internal audit activity (IAA). According to IIA guidance, which of the following are the most appropriate strategies to maximize the value of the current IAA resources?
1.
The annual audit plan should include audits that are consistent with the skills of the IAA.
2.
Audits of high-risk areas of the organization should be conducted by internal audit staff.
3.
External resources may be hired to provide subject-matter expertise but should be supervised.
4.
Auditors should develop their skills by being assigned to complex audits for learning opportunities.
A. 1 and 2 only
B. 1 and 4 only
C. 2 and 3 only
D. 3 and 4 only
According to IIA guidance, which of the following is true when the internal audit activity is asked to investigate potential ethics violations in a foreign subsidiary?
A. Communication of any internal ethics violations to external parties may occur with appropriate safeguards.
B. Cultural impacts are less critical where the organization practices uniform polices around the globe.
C. Cross-cultural differences should always be handled by the staff of the same cultural background.
D. Local law enforcement should be involved as they are more familiar with the applicable local laws.
When setting the scope for the identification and assessment of key risks and controls in a process, which of the following would be the least appropriate approach?
A. Develop the scope of the audit based on a bottom-up perspective to ensure that all business objectives are considered.
B. Develop the scope of the audit to include controls that are necessary to manage risk associated with a critical business objective.
C. Specify that the auditors need to assess only key controls, but may include an assessment of non-key controls if there is value to the business in providing such assurance.
D. Ensure the audit includes an assessment of manual and automated controls to determine whether business risks are effectively managed.
An internal auditor and engagement client are deadlocked over the auditor's differing opinion with management on the adequacy of access controls for a major system. Which of the following strategies would be the most helpful in resolving this dispute?
A. Conduct a joint brainstorming session with management.
B. Ask the chief audit executive to mediate.
C. Disclose the client's differing opinion in the final report.
D. Escalate the issue to senior management for a decision.
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?
1.
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.
2.
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.
3.
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.
4.
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.
A. 1 and 3 only
B. 1 and 4 only
C. 2 and 3 only
D. 2 and 4 only
The newly appointed chief audit executive (CAE) of a large multinational corporation, with seasoned internal audit departments located around the world, is reviewing responsibilities for engagement reports. According to IIA guidance, which of the following statements is true?
A. The CAE is required to review, approve, and sign every engagement report.
B. The CAE is required to review, approve, and sign all regulatory compliance engagement reports only
C. The CAE may delegate responsibility for reviewing, approving and signing engagement reports, but should review the reports after they are issued.
D. The internal audit charter must identify authorized signers of engagement reports.
The internal audit activity (IAA) wants to measure its performance related to the quality of audit recommendations. Which of the following client survey questions would best help the IAA meet this objective?
A. Were audit findings relevant and useful to management?
B. Does the audit report format present issues clearly and concisely?
C. Does the IAA work with a high degree of professionalism and objectivity?
D. Were the findings reported in a timely manner?
According to the Standards, which of the following is least important in determining the adequacy of an annual audit plan?
A. Sufficiency.
B. Appropriateness.
C. Effective deployment.
D. Cost effectiveness.
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