IIA IIA Certifications IIA-CIA-PART2 Questions & Answers

• Question 291:

  Which of the following events would most likely cause the chief audit executive to consider changing the current year's audit plan?

  1.

  The government announced that new regulatory requirements will be introduced in the coming years which may significantly impact the organization's primary product.

  2.

  A major competitor unexpectedly introduced a new model at a lower price point to compete with the organization's market leading product.

  3.

  The organization announced a new joint venture with a long time corporate partner to introduce a new product with development costs and sales beginning next fiscal year.

  4.

  An equal joint venture partner filed a lawsuit against the organization and requested that the court issue an immediate suspension of future product shipments.

  A. 1 and 2 only

  B. 1 and 3 only

  C. 2 and 4 only

  D. 3 and 4 only

  Correct Answer: C

• Question 292:

  According to IIA guidance, which of the following are potential benefits of using an assurance map?

  A. Indication of any gaps in assurance coverage, and improved relevance of assurance recommendations.

  B. Identification of duplicate or overlapping assurance activities, and improved relevance of assurance recommendations.

  C. Indication of gaps in assurance coverage, and enhanced effectiveness of assurance providers.

  D. Enhanced effectiveness of assurance providers, and improved relevance of assurance recommendations.

  Correct Answer: C

• Question 293:

  The chief audit executive (CAE) is adding a new audit position to the team. According to the International Professional Practices Framework, which of the following candidates would the CAE be least likely to accept for the position?

  A. The candidate is applying for an IT audit position, while originally coming from an IT background, but has only experiences of financial and compliance audits in the previous position.

  B. The candidate is knowledgeable about potential indicators of fraud including typical risks, but has only participated as a staff auditor in one investigative fraud audit.

  C. The candidate meets the minimum educational requirements established by the chief audit executive, but has less formal education than any of the other candidates being considered.

  D. The candidate provides examples of previous reports demonstrating excellent writing skills, but lacks ability to clearly communicate ideas and conclusions in a meeting.

  Correct Answer: D

• Question 294:

  The internal audit activity of an investment company received a request to provide assurance on the risk management process. Preliminary discussion with senior management revealed that separate functions within the organization perform some form of risk management activities. Which of the following is the most effective tool for ensuring that risk management activities are coordinated among these functions?

  A. Delphi technique.

  B. Assurance map.

  C. Facilitated workshop.

  D. Analytical reviews.

  Correct Answer: B

• Question 295:

  An internal auditor has been asked to participate in an advisory capacity to assist a committee in redesigning the organization's current financial reports to provide better information to management and the board. Which of the following actions on the part of the auditor would provide the greatest value to this project?

  A. The internal auditor has a set of generic report templates from a former project and presents them to the group because they worked so well for the previous employer.

  B. The internal auditor interviews each stakeholder and documents the requirements and preferences of each and creates a report template that meets as many of the requirements and preferences as possible.

  C. The internal auditor gathers the stakeholder group and holds a brainstorming session where they generate report requirements and preferences and then rank them in order of importance.

  D. The internal auditor undertakes a project to gather report templates and formats from other organizations in the same line of business and presents them all to the group for review.

  Correct Answer: C

• Question 296:

  According to the International Professional Practices Framework, which of the following situations is an indicator of a healthy relationship between the audit committee and the internal audit function?

  A. The chief audit executive (CAE) has direct access to the audit committee and the board but typically does not interact directly with them unless a material weakness in the control environment is identified.

  B. The CAE sends the audit committee all communications between the internal audit department and the audit client in order to keep the audit committee up to date on the engagement.

  C. The CAE does not distribute audit reports to the audit committee. However, the audit committee is made aware of the scope and findings of audits performed.

  D. Whenever a potential audit finding or testing exception is first identified, the audit committee is immediately notified, as well as for any subsequent changes in the status of the engagement.

  Correct Answer: C

• Question 297:

  A payroll clerk enters payroll transactions into the general ledger. The staff accountant reconciles the payroll ledgers. The payroll manager issues the manual payroll checks. The checks are maintained in a locked cabinet. The chief financial officer secures the keys to the cabinet. The payroll clerk distributes the manual checks.

  The payroll manager reconciles the bank statements monthly. Which of the following audit steps best addresses the risk of fraud in the payroll process?

  A. Examine whether the payroll manager approves the reconciliations of ledgers.

  B. Determine whether an approved list of voided checks exists.

  C. Determine whether the cabinet keys are secured properly.

  D. Vouch a sample of items on bank reconciliations to supporting documentation.

  Correct Answer: D

• Question 298:

  According to the Standards, which of the following would least likely be considered a red flag when evaluating the risk for fraud?

  A. Cash receipts appear to be lower than expected from an employee's cash drawer.

  B. Health benefits are detected to be claimed for a deceased employee.

  C. An employee did not approve an internal report detailing expenses for the month.

  D. It is alleged that an employee is receiving vendor kickbacks.

  Correct Answer: C

• Question 299:

  Which of the following conditions should a chief audit executive take into account when deciding if a follow-up audit engagement is necessary?

  1.

  The reported observations were significant and high risk.

  2.

  Internal audit resources and the time it will require for follow-up.

  3.

  Management may not have the resources to take action.

  4.

  Management has previously decided not to take any action.

  A. 1, 2, and 3 only

  B. 1, 2, and 4 only

  C. 1, 3, and 4 only

  D. 2, 3, and 4 only

  Correct Answer: B

• Question 300:

  According to the International Professional Practices Framework, the internal audit activity's decision to defer follow-up of recommendations and management's corrective actions until the next scheduled engagement for the area is justified when:

  A. The reported findings or recommendations are significant enough to require immediate action by management.

  B. The action taken by management to address the recommendation is sufficient when weighed against the importance of the finding.

  C. Management has adequately understood and appropriately accepted the risk of not taking action to implement the recommendation.

  D. The significance of the finding or recommendation will allow auditors to perform monitoring by receiving periodic updates from management on corrective actions taken.

  Correct Answer: B