IIA-CIA-Part2 Practice Exam and Study Guides - Verified By TestPassKing Updated 600 Questions
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NEW QUESTION 185
An internal auditor compared the number of human resources professionals per employee with industry standards. This comparison would assist the auditor in evaluating which of the following areas?
- A. Adequacy of controls over hiring new employees.
- B. Degree of compliance with human resources policies.
- C. Sufficiency of controls over payroll rate increases.
- D. Current level of performance of the human resources department.
Answer: D
NEW QUESTION 186
An audit identified a number of weaknesses in the configuration of a critical client/server system. Although some of the weaknesses were corrected prior to the issuance of the audit report, correction of the rest will require between six and 18 months for completion. Consequently, management has developed a detailed action plan, with anticipated completion dates, for addressing the weaknesses. Which of the following is the most appropriate course of action for the chief audit executive to take?
- A. Reassign information systems auditors to assist the information technology department in correcting the weaknesses.
- B. Assess the adequacy of the action plan and monitor key dates and deliverables.
- C. Evaluate statistics related to unplanned system outages, unauthorized access attempts, and denials of service to assess the effectiveness of corrections.
- D. Schedule a follow-up audit engagement to assess the status of corrective action.
Answer: B
NEW QUESTION 187
Which of the following represents appropriate evidence of supervisory review of engagement workpapers?
I. A supervisor's initials on each workpaper.
II. An engagement workpaper review checklist.
III. A memorandum specifying the nature, extent, and results of the supervisory review of workpapers.
IV. Performance appraisals that assess the quality of workpapers prepared by auditors.
- A. II and IV only
- B. I, II, III, and IV.
- C. I, III, and IV only
- D. I, II, and III only
Answer: D
Explanation:
Section: Volume B
NEW QUESTION 188
What type of analysis is performed when an auditor tests for unusual variations in information by comparing the number of employees working at a factory site with the direct cost of production each month over a period of one year?
- A. Ratio analysis.
- B. Horizontal analysis.
- C. Regression analysis.
- D. Trend analysis.
Answer: C
NEW QUESTION 189
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. The survey would not consider customers who did not make purchases in the last three months.
- B. Although useful, such an analysis does not address any risk factors.
- C. Analysis of three months' activity would not evaluate customer satisfaction.
- D. Steps 1 and 2 of the analysis are not necessary or cost-effective if the customer survey is comprehensive.
Answer: A
NEW QUESTION 190
During an audit of a contract for computer security, a governmental auditor finds that a contractor has developed a system that could be the most advanced in the industry. If it seems that the contractor is charging the government for developmental cost of a system that might be sold to other organizations, what is the auditor's best course of action?
- A. Compare the cost of the security program with previous costs incurred by governmental operations and inform the contractor that the difference will be a disallowed cost.
- B. Estimate the added cost, report it to management, and suggest that management meet with its lawyers and the contractor to resolve differences.
- C. Estimate the cost to develop the advanced security system and inform the contractor that it will be a disallowed cost.
- D. Exclude the observation from the engagement final communication because the contract was vague and the level of security is clearly acceptable.
Answer: B
NEW QUESTION 191
Due to a recent system upgrade, an audit is planned to test the payroll process. Which of the following audit objectives would be most important to prevent fraud?
- A. Verify that amounts are correct.
- B. Verify that payments are on time.
- C. Verify that benefits deductions are accurate.
- D. Verify that recipients are valid employees.
Answer: D
NEW QUESTION 192
The following audit observation was included in the final audit report:
"Our review concluded that bank reconciliation statements for March and April did not show evidence of supervisory review. We recommend strict compliance with the controller's manual, which requires the department head to place their initials on the reconciliation statements to document their review." Which of the following attributes are missing from the above audit observation?
1. Criteria.
2. Condition.
3. Cause.
4. Effect.
- A. 1, 3, and 4 only
- B. 2 and 3 only
- C. 1 and 4 only
- D. 3 and 4 only
Answer: D
NEW QUESTION 193
Which of the following statements is false regarding audit criteria?
- A. Audit criteria should be consistent across audit assignments.
- B. Audit criteria should provide flexibility but allow identification of nonadherence.
- C. Audit criteria should equate to good or acceptable management practices.
- D. Audit criteria should represent reasonable standards against which to assess existing conditions.
Answer: A
NEW QUESTION 194
Which of the following types of internal audit consulting engagements is an example of a facilitation service?
1. Conducting control self-assessment workshops.
2. Participating on standing committees.
3. Reviewing regulatory compliance.
4. Benchmarking.
5. Estimating savings from outsourcing processes.
- A. I and IV only
- B. I, III, and IV only
- C. I, II, III, IV, and V.
- D. II, III, and V only
Answer: A
NEW QUESTION 195
Which of the following statements is correct regarding the use of a program evaluation and review technique (PERT) model?
It makes use of a probability model to arrive at a realistic estimate of time necessary for completion of the audit engagement.
It requires that activities are performed in sequence such that each task is completed before the commencement of the next activity.
It remains fixed once completed to act as a baseline for measuring the performance of the audit staff following completion of the engagement.
It begins with the auditor-in-charge identifying the overall scope and then breaking down the audit engagement into identifiable activity units.
- A. 2 and 4 only
- B. 2 and 3 only
- C. 1 and 3 only
- D. 1 and 4 only
Answer: D
NEW QUESTION 196
Information gathered in a forensic investigation of business fraud is usually gathered with which of the following standards in mind?
- A. Legal evidence.
- B. Generally Accepted Accounting Principles.
- C. Generally Accepted Auditing Standards.
- D. The International Professional Practices Framework.
Answer: A
NEW QUESTION 197
Which two of the following considerations must an internal auditor take into account while planning an audit of an accounting system/application that has been in use for the last five years?
* The level and manner of linkages between the business' mission, objectives, and structure and the accounting system/application.
* Presence or absence of computerized and manual controls that address risks.
* Identification of risks at the application level, e.g. availability and security of the system.
* Testing of the system/application for bugs and errors.
- A. 2 and 3 only
- B. 2 and 4 only
- C. 1 and 3 only
- D. 3 and 4 only
Answer: A
NEW QUESTION 198
As part of an operational audit of the shipping department, an auditor selected a sample of 45 daily shipping logs from the department's files. On 44 of the days, the log contained a sufficient number of shipments to meet the department's daily quota. Based on this test, the auditor concluded that the shipping department was effective at meeting its quotas. Which of the following is true about the auditor's conclusion?
- A. None of the above.
- B. The number of items selected for testing is inadequate to justify the conclusion.
- C. This conclusion would negate any need to perform tests of efficiency.
- D. The shipping department is effective in meeting its responsibilities.
Answer: A
Explanation:
Section: Volume A
NEW QUESTION 199
An internal auditor has just undertaken an organization-wide risk assessment. In identifying potential audit engagements the internal auditor should consider least:
- A. Focusing in areas not audited last year.
- B. Focusing on those risks highlighted by the external auditor.
- C. Factoring in management requests.
- D. Focusing on the high risk areas as sources of potential engagements.
Answer: A
NEW QUESTION 200
Which of the following types of internal audit consulting engagements is an example of a facilitation service?
I. Conducting control self-assessment workshops.
II. Participating on standing committees.
III. Reviewing regulatory compliance.
IV. Benchmarking.
V. Estimating savings from outsourcing processes.
- A. I and IV only
- B. I, III, and IV only
- C. I, II, III, IV, and V.
- D. II, III, and V only
Answer: A
NEW QUESTION 201
An airline contracted with an external service provider to perform maintenance on all aircraft ground support equipment. Management then asked the internal audit activity (IAA) to evaluate the controls in place that would permit appropriate oversight of the service provider in maintaining required maintenance standards.
According to the International Professional Practices Framework, which of the following would be the most appropriate course of action for the IAA to undertake to establish the engagement objectives?
- A. Develop a preliminary audit program and obtain senior management's approval.
- B. Obtain a copy of the maintenance contract and review the contract for pricing discrepancies.
- C. Conduct a preliminary assessment of the risks associated with the maintenance contract.
- D. Develop a draft audit plan and create an appropriate scope and resource schedule.
Answer: C
NEW QUESTION 202
Which of the following is a responsibility of the internal auditor once a fraud investigation has been concluded?
- A. Notify the appropriate regulatory authorities regarding the outcome of the investigation.
- B. Implement controls to prevent future occurrences.
- C. Determine if controls need to be implemented or strengthened to reduce future vulnerability.
- D. Ascertain the extent to which fraud has been perpetrated.
Answer: C
NEW QUESTION 203
Which of the following is the best approach for obtaining feedback from engagement clients regarding the quality of internal audit work?
- A. Provide questionnaires to engagement clients at the beginning of each engagement and request that the clients complete and return them after the engagements.
- B. Call engagement clients after the exit interviews and send copies of the documented responses to the clients.
- C. Ask questions during the exit interviews and send copies of the documented responses to the clients.
- D. Distribute questionnaires to selected engagement clients shortly before preparing the internal audit annual activity report.
Answer: A
NEW QUESTION 204
During an engagement, an internal auditor discovered that an organization's policy on delegation of authority listed six individuals who were no longer employed with the organization. In addition, four individuals acting with disbursement authority were not identified in the policy as having such authority. Which of the following is the most effective course of action to address the control weakness?
- A. Recommend that management review the process supporting the policy and make improvements.
- B. Immediately initiate a complete audit of the disbursement function to determine if significant frauds have occurred.
- C. Review further to ensure that the four individuals do not have the appropriate authority through delegation.
- D. Advise management to add the four additional names and remove the incorrect names from the policy to make it current.
Answer: A
NEW QUESTION 205
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?
* 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.
* 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.
* 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.
* 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. 2 and 4 only
- B. 2 and 3 only
- C. 1 and 3 only
- D. 1 and 4 only
Answer: D
NEW QUESTION 206
Which of the following is the most important concept to be included in a consulting engagement agreement?
- A. Clarify that matters discovered during the engagement may also be reported to senior management and the audit committee.
- B. Disclose the fact that auditors who perform the work may not be subject matter experts in the topic of the review.
- C. Disclose the fact that follow-up reviews may be conducted to ensure that recommendations are implemented adequately.
- D. Define the duties and responsibilities needed from management to perform the engagement.
Answer: A
NEW QUESTION 207
According to IIA guidance, which of the following statements best justifies a chief audit executive's request for external consultants to complement internal audit activity (IAA) resources?
- A. The organization's audit universe is extensive and diverse.
- B. Previous work provided by the external service provider has been of great quality and value.
- C. There has been an increase in unanticipated requests for advisory work.
- D. A recent benchmarking study found that using external service providers is a common practice of similarly- sized IAAs in other organizations.
Answer: C
Explanation:
Section: Volume E
NEW QUESTION 208
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