IIA IIA-CIA-Part2 Deluxe Study Guide with Online Test Engine
IIA-CIA-Part2 dumps review - Professional Quiz Study Materials
IIA IIA-CIA-Part2 Exam Syllabus Topics:
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NEW QUESTION 285
The following is an excerpt from an audit engagement workpaper:
* A Company
* Accounts Receivable
* Date
Objective. To determine if the computer system is correctly recording all accounts receivable transactions.
Procedures: Judgmental selection of a sample of all accounts receivable balances greater than $50,000 for positive confirmation of balances.
Conclusion: Based on the results of testing wherein all but three confirmations were returned, the accounts receivable balance is fairly presented in all material respects.
Which of the following is true regarding the workpaper?
- A. The audit procedures used are not consistent with the audit objective.
- B. It is not appropriate to judgmentally select a sample when testing accounts receivable.
- C. A conclusion should be reached only for the results of overall testing, not for individual procedures.
- D. The format of the workpaper does not conform to the standard format for workpapers.
Answer: A
Explanation:
Section: Volume A
NEW QUESTION 286
If an auditor used nonstatistical sampling instead of statistical sampling to estimate the value of inventory, which of the following would be true?
- A. The precision would be larger.
- B. The projected value of inventory would be less reliable.
- C. The confidence level could not be quantified.
- D. The risk of incorrect acceptance would be higher.
Answer: C
NEW QUESTION 287
The chief audit executive (CAE) decided that based on management's oral response, the action taken on an audit observation for a minor improvement in the client's process is sufficient and no further follow-up is necessary. Which of the following would be the best statement regarding the action of the CAE?
- A. The CAE action is not acceptable, as a follow-up audit is needed to ensure that action is really taken by management.
- B. The CAE action is not acceptable, as follow-up on the issue is critical until a written response is obtained from management.
- C. The CAE action is acceptable as long as the issue has been escalated to the board to get their position on the issue.
- D. The CAE action is acceptable as long as the follow-up is sufficient when weighed against the relative importance of the recommendation.
Answer: D
NEW QUESTION 288
An appliance repair company is considering relocating the center that houses its service vehicles. An internal auditor wants to determine the potential reduction in average miles driven by the service vehicles if the center is relocated. Which of the following statistical sampling methods would be most appropriate for this test?
- A. Discovery sampling.
- B. Probability-proportional-to-size sampling.
- C. Attributes sampling.
- D. Mean-per-unit sampling.
Answer: D
NEW QUESTION 289
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
Answer: B
NEW QUESTION 290
According to the International Professional Practices Framework, which of the following statements is true regarding the use of the statement, "Conducted in Conformance with the International Standards for the Professional Practice of Internal Auditing," when communicating results of a seven-year-old internal audit activity?
- A. The statement may be used only when conducting international engagements.
- B. The statement may be used only if the results of the quality assurance and improvement program support the statement.
- C. The statement should not be used for a consulting engagement.
- D. The statement may be used whether or not the internal audit department has an external quality assessment review or an independent validation of a self-assessment.
Answer: B
Explanation:
Section: Volume C
NEW QUESTION 291
A code of business conduct provides:
- A. A passive method of fraud deterrence.
- B. An alternative to "tone at the top" programs.
- C. A program to anonymously report irregularities to authorities.
- D. A fraud avoidance plan that does not explicitly describe punishments for violations.
Answer: A
Explanation:
Section: Volume C
NEW QUESTION 292
An internal auditor is reviewing purchases made through the organization's corporate credit card program. Which of the following statements best describes a root cause of a deficiency?
- A. Sample testing found 10% non-compliance with the organization's business travel policy.
- B. A control to detect split purchases has not been activated in the credit card system.
- C. Company policy limits card use to $500 per transaction.
- D. A personal computer was purchased from a non-approved vendor.
Answer: B
NEW QUESTION 293
An auditor for a major retail company suspects that inventory fraud is occurring at three stores which have high costs of goods sold. Which of the following audit activities would provide the most persuasive evidence that fraud is occurring?
- A. Schedule a surprise inventory audit to include a physical inventory and investigate areas of inventory shrinkage.
- B. Interview the three individual store managers to determine if their explanations about the observed differences are the same, and then compare their explanations to that of the section manager.
- C. Select a sample of individual store prices and compare them with the sales entered on the cash register for the same items.
- D. Use an integrated test facility (ITF) to compare individual sales transactions with test transactions submitted through the ITF and investigate all differences.
Answer: A
Explanation:
Section: Volume A
NEW QUESTION 294
When conducting a performance appraisal of an internal auditor who has been a below-average performer, it is not appropriate to:
- A. Document the appraisal.
- B. Notify the internal auditor of the upcoming appraisal several days in advance.
- C. Use objective, impartial language.
- D. Use generalizations.
Answer: D
Explanation:
Section: Volume B
NEW QUESTION 295
Which of the following is an advantage of an interim report?
I.
An interim report provides timely feedback to the audit engagement client.
II.
An interim report provides a mechanism for communicating information on red flags promptly while they are being investigated.
III.
An interim report provides an opportunity for auditor follow-up of findings before the engagement is completed.
IV.
An interim report increases the probability that corrective action will be initiated more quickly.
- A. I, III, and IV only
- B. II and III only
- C. I and IV only
- D. I, II, III, and IV.
Answer: A
NEW QUESTION 296
During an operational audit of a chain of pizza delivery stores, an auditor determined that cold pizzas were causing customer dissatisfaction. A review of oven calibration records for the last six months revealed that adjustments were made on over 40 percent of the ovens. Based on this, the auditor:
- A. Has enough evidence to recommend the replacement of some of the ovens.
- B. Must search for another cause since approximately 60 percent of the ovens did not require adjustment.
- C. Needs to conduct further inquiries and reviews to determine the impact of the oven variations on the pizza temperature.
- D. Has enough evidence to conclude that improperly functioning ovens are the cause.
Answer: C
Explanation:
Section: Volume A
NEW QUESTION 297
The engagement supervisor would like lo change the audit program's scope poor to beginning fieldwork According to IIA guidance before any change is implemented what is the most important action that should be undertaken?
- A. Confirm that the internal audit activity continues to have the necessary knowledge and skills
- B. Document in the engagement workpapers the rationale for changing the scope.
- C. Confirm that the scope change would align to the organization's objectives and goals
- D. Seek approval from the chief audit executive for the proposed scope change
Answer: D
NEW QUESTION 298
When conducting research, which of the following is most important?
- A. Presenting only those facts that support the conclusion.
- B. Presenting all contrary views to balance the opinion.
- C. Using computer databases or the Internet to find all relevant sources.
- D. Providing documentation of the reference sources.
Answer: D
NEW QUESTION 299
An auditor plans to analyze customer satisfaction, including: (1) customer complaints recorded by the customer service department during the last three months; (2) merchandise returned in the last three months; and (3) responses to a survey of customers who made purchases in the last three months. Which of the following statements regarding this audit approach is correct?
- A. Although useful, such an analysis does not address any risk factors.
- B. Steps 1 and 2 of the analysis are not necessary or cost-effective if the customer survey is comprehensive.
- C. The survey would not consider customers who did not make purchases in the last three months.
- D. Analysis of three months' activity would not evaluate customer satisfaction.
Answer: C
Explanation:
Section: Volume A
NEW QUESTION 300
Which of the following statements is true regarding the use of internal control questionnaires (ICOs)?
- A. ICQs offer limited value for organizations with uniform procedures
- B. ICQs are efficient because they minimize the need for follow-up with survey respondents
- C. Controls with positive survey responses can be eliminated from further testing
- D. Answers to survey questions can be easily misinterpreted
Answer: A
NEW QUESTION 301
According to IIA guidance, which of the following strategies would add the least value to the achievement of the internal audit activity's (IAA's) objectives?
- A. Establish a format and frequency for IAA reporting that is appropriate and aligns with the organization's governance structure.
- B. Use the results of IAA engagement and advisory reporting to guide current and future internal audit activities.
- C. Align organizational activities to internal audit activities and measure according to the approved IAA performance measures.
- D. Establish a periodic review of monitoring and reporting processes to help ensure relevant IAA reporting.
Answer: C
Explanation:
Section: Volume E
NEW QUESTION 302
An auditor decides to perform an inventory turnover analysis for both raw materials inventory and finished goods inventory. The analysis would be potentially useful in:
I. Identifying products for which management has not been attuned to changes in market demand.
II. Identifying potential problems in purchasing activities.
III.
Identifying obsolete inventory.
- A. I and II only
- B. II and III only
- C. III only
- D. I, II, and III
Answer: D
NEW QUESTION 303
Which of the following would be the best audit procedure to use to determine if a division's unusually high sales and gross margin for November and December were the result of fraudulently recorded sales?
- A. Confirm accounts receivable balances with customers.
- B. Trace a sample of shipping documents to related sales invoices to verify proper billing.
- C. Compare sales and gross margin totals with those of the previous ten months and the first month of the following year.
- D. Use regression analysis techniques to estimate the sales and cost of goods sold for November and December.
Answer: A
NEW QUESTION 304
Which of the following is an example of the verification of internal documentary evidence?
- A. Reviewing a carrier's bill of lading.
- B. Reconciling a vendor's month-end statement.
- C. Recalculating a customer's purchase order.
- D. Vouching a copy of a sales invoice to receivables.
Answer: D
NEW QUESTION 305
Which of the following topics must the internal audit staff discuss with management during the exit conference?
1. Issues identified during the audit.
2. Evaluation criteria used to select controls for testing.
3. Staff who were interviewed during the audit.
4. The reporting process for the draft and final report.
- A. 1 and 3 only
- B. 2 and 4 only
- C. 2 and 3 only
- D. 1 and 4 only
Answer: D
NEW QUESTION 306
According to the Standards, which of the following best describes the responsibility of the chief audit executive (CAE) for approving the final engagement report?
The CAE is responsible for obtaining management approval before issuing the final report.
The CAE has overall responsibility for the report but can delegate the review and approval of the report.
The CAE is responsible for obtaining senior management's approval before releasing the final report.
The CAE is responsible for approving to whom and how the final report will be disseminated.
- A. 2 and 4 only
- B. 1 and 3 only
- C. 2 and 3 only
- D. 1 and 4 only
Answer: A
NEW QUESTION 307
Which of the following performance criteria would be most useful when measuring the performance of a customer service desk?
- A. The percentage of total customers served per day.
- B. The percentage of customer issues resolved within 24 hours.
- C. The number of customer complaints recorded per day.
- D. The number of customer inquiries recorded per day.
Answer: B
NEW QUESTION 308
Which of the following is least likely to vary when conducting audit engagements in different regions of an international organization?
- A. Work schedules and holidays of the individual regions.
- B. Availability of technology and technical support.
- C. Level of workpaper documentation needed to support audit observations.
- D. Application of governmental regulations to business activities.
Answer: C
Explanation:
Section: Volume C
NEW QUESTION 309
As part of an operational audit, an auditor compared records of current inventory with usage during the prior two-year period and determined that the spare parts inventory was excessive. What step should the auditor perform first?
- A. Determine the effects of a stock-out on the organization's profitability.
- B. Determine who approved the purchase orders for the spare parts.
- C. Determine whether a clear policy exists for setting inventory limits.
- D. Determine whether purchases were properly recorded.
Answer: C
NEW QUESTION 310
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