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IIA IIA-CIA-Part2 Exam Syllabus Topics:
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NEW QUESTION 263
An internal auditor found that the cost of some material installed on capital projects had been transferred to the inventory account because the capital budget had been exceeded. Which of the following would be an appropriate technique for the auditor to use to determine the extent of the problem?
- A. Review all journal entries that transferred costs from capital to inventory accounts.
- B. Identify variances between amounts capitalized each month and the capital budget.
- C. Compare inventory receipts with debits to the inventory account and investigate discrepancies.
- D. Analyze a sample of capital transactions each quarter to detect instances in which installed material was transferred to inventory.
Answer: A
Explanation:
Section: Volume B
NEW QUESTION 264
When constructing a staffing schedule for the internal audit activity (IAA), which of the following criteria are most important for the chief audit executive to consider for the effective use of audit resources?
1.The competency and qualifications of the audit staff for specific assignments.
2.The effectiveness of IAA staff performance measures.
3.The number of training hours received by staff auditors compared to the budget.
4.The geographical dispersion of audit staff across the organization.
- A. 2 and 4
- B. 2 and 3
- C. 1 and 3
- D. 1 and 4
Answer: D
NEW QUESTION 265
Which of the following is true regarding roles and responsibilities in risk management processes?
- A. Ownership of risks resides with the board.
- B. Acceptance of residual risk resides with executive management level.
- C. Setting strategic direction resides with senior management.
- D. Identifying, assessing, mitigating and monitoring activities on a continuous basis rests with the internal audit activity.
Answer: B
NEW QUESTION 266
Which of the following is correct with respect to roles within an enterprise-wide risk management process?
1.The board provides oversight to the risk management process.
2.Executive management owns the risk management framework.
3.Senior management is assigned ownership of risks.
4.Internal audit modifies the risk assessment determined by management.
- A. 1, 2, 3, and 4
- B. 1 and 2 only
- C. 1, 2, and 3 only
- D. 3 and 4 only
Answer: C
NEW QUESTION 267
Which of the following trends found on financial reports would most likely indicate a possible problem?
- A. A material increase in daily sales compared to total outstanding receivables.
- B. A material increase in the acid-test ratio.
- C. A material increase in inventory turnover.
- D. A material decrease in the receivables turnover.
Answer: D
NEW QUESTION 268
When constructing a staffing schedule for the internal audit activity (IAA), which of the following criteria are most important for the chief audit executive to consider for the effective use of audit resources?
1. The competency and qualifications of the audit staff for specific assignments.
2. The effectiveness of IAA staff performance measures.
3. The number of training hours received by staff auditors compared to the budget.
4. The geographical dispersion of audit staff across the organization.
- A. 2 and 4
- B. 2 and 3
- C. 1 and 3
- D. 1 and 4
Answer: D
NEW QUESTION 269
Which of the following is the best approach for obtaining feedback from engagement clients regarding the quality of internal audit work?
- A. Call engagement clients after the exit interviews and send copies of the documented responses to the clients.
- B. Provide questionnaires to engagement clients at the beginning of each engagement and request that the clients complete and return them after the engagements.
- C. Distribute questionnaires to selected engagement clients shortly before preparing the internal audit annual activity report.
- D. Ask questions during the exit interviews and send copies of the documented responses to the clients.
Answer: B
NEW QUESTION 270
The most common motivation for management fraud is the existence of:
- A. Job dissatisfaction.
- B. Financial pressures on the organization.
- C. The challenge of committing the perfect crime.
- D. Vices, such as a gambling habit.
Answer: B
Explanation:
Section: Volume A
NEW QUESTION 271
Which of the following is the least relevant when preparing the internal audit activity's annual engagement plan?
- A. A rotation of internal audit engagements selected on a time basis.
- B. Coordination with the audit plans of the external auditor.
- C. The organization's current risk priority and exposure.
- D. Senior management's requests for internal audit engagements.
Answer: A
Explanation:
Section: Volume D
NEW QUESTION 272
When assessing the risk associated with an activity, an internal auditor should:
- A. Determine how the risk should best be managed.
- B. Modify the risk management process based on risk exposures.
- C. Provide assurance on the management of the risk.
- D. Design controls to mitigate the identified risks.
Answer: C
NEW QUESTION 273
When assessing the risk associated with an activity, an internal auditor should:
- A. Determine how the risk should best be managed.
- B. Modify the risk management process based on risk exposures.
- C. Provide assurance on the management of the risk.
- D. Design controls to mitigate the identified risks.
Answer: C
Explanation:
Section: Volume A
Explanation/Reference:
NEW QUESTION 274
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. Initiative.
- B. Curiosity.
- C. Flexibility.
- D. Integrity.
Answer: B
Explanation:
Section: Volume E
NEW QUESTION 275
A large retail organization, which sells most of its products online, experiences a computer hacking incident.
The chief IT officer immediately investigates the incident and concludes that the attempt was not successful.
The chief audit executive (CAE) learns of the attack in a casual conversation with an IT auditor. Which of the following actions should the CAE take?
1. Meet with the chief IT officer to discuss the report and control improvements that will be implemented as a result of the security breach, if any.
2. Immediately inform the chair of the audit committee of the security breach, because thus far only the chief IT officer is aware of the incident.
3. Meet with the IT auditor to develop an appropriate audit program to review the organization's Internet-based sales process and key controls.
4. Include the incident in the next quarterly report to the audit committee.
- A. 2 and 4
- B. 1 and 2
- C. 1 and 3
- D. 3 and 4
Answer: B
Explanation:
Section: Volume E
NEW QUESTION 276
An internal auditor for a financial institution has just completed an audit of loan processing. Of the 81 loans approved by the loan committee, the auditor found seven loans which exceeded the approved amount. Which of the following actions would be inappropriate on the part of the auditor?
- A. Determine the amount of the differences and make an assessment as to whether the dollar differences are material. If the amounts are not material, not in violation of government regulations, and can be rationally explained, omit the observation from the engagement final communication.
- B. Follow up with the appropriate vice president and include the vice president's acknowledgment of the situation in the engagement final communication.
- C. Examine the seven loans to determine if there is a pattern. Summarize amounts and include in the engagement final communication.
- D. Report the amounts to the loan committee and leave it up to them to correct. Take no further follow-up action at this time and do not include the items in the engagement final communication.
Answer: D
Explanation:
Section: Volume B
NEW QUESTION 277
The use of standard operating procedure questionnaires in audit fieldwork can be beneficial because.
- A. Standard operating procedures are essential to the effectiveness and efficiency of operations.
- B. These questionnaires do not normally require prior clearance with management of the audited area.
- C. These questionnaires are more comprehensive than are other types of techniques for gathering data during fieldwork.
- D. These questionnaires can both identify discrepancies and educate clients.
Answer: D
NEW QUESTION 278
Which of the following is an advantage to using the questionnaire approach when conducting risk and control self assessments?
- A. Follow-up for clarification is efficient.
- B. It is educational for participants.
- C. Responses can easily be quantified and analyzed.
- D. It allows for in-depth probing of issues.
Answer: C
NEW QUESTION 279
An internal auditor is assigned to validate calculations on the organization's building application As pad of the test the internal auditor is required to use an automated audit tool to simulate transactions for testing. Which of the following would most appropriately be used for this purpose?
- A. Generalized audit software.
- B. integrated test facilities
- C. Utility software
- D. Audit expert systems
Answer: B
NEW QUESTION 280
According to the Standards, which of the following would have the least direct interest in the draft report of a compliance review of the purchasing function?
- A. Purchasing staff.
- B. Audit committee.
- C. Director of finance.
- D. Purchasing manager.
Answer: B
Explanation:
Section: Volume D
NEW QUESTION 281
Which of the following would be a red flag that indicates the possibility of inventory fraud?
1. The controller has assumed responsibility for approving all payments to certain vendors.
2. The controller has continuously delayed installation of a new accounts payable system, despite a corporate directive to implement it.
3. Sales commissions are not consistent with the organization's increased levels of sales.
4. Payments to certain vendors are supported by copies of receiving memos, rather than originals.
- A. I, III, and IV only
- B. I, II, and IV only
- C. II and III only
- D. I and II only
Answer: B
NEW QUESTION 282
During a payroll audit of a large organization, an internal auditor noted that the assistant personnel director is responsible for many aspects of the computerized payroll system, including adding new employees in the system; entering direct-deposit information for employees; approving and entering all payroll changes; and providing training for system users. After discussions with the director of personnel, the auditor concluded that the director was not comfortable dealing with information technology issues and felt obliged to support all actions taken by the assistant director. The auditor should:
- A. Review the engagement program to ensure testing of direct deposits to employee bank accounts is adequately covered.
- B. Recommend to the chief audit executive that a fraud investigation be started.
- C. Continue to follow the engagement program because the engagement scope and objectives have already been discussed with management.
- D. Test a sample of payroll changes to ensure that they were approved by the assistant director before being processed.
Answer: A
NEW QUESTION 283
The internal auditor is asked to conduct an investigation involving a suspected fraud. According to the Standards, which of the following statements regarding the investigation process is false?
- A. The auditor should not limit the collection of information by prejudging its relevance to the investigation.
- B. The auditor should use anonymous surveys of coworkers to assess the character and behavior of the suspect.
- C. The auditor must consider the risk that audit procedures may inadvertently violate the rights of the suspect.
- D. The auditor must give consideration to the risk of unidentified co-conspirators whether indications exist or not.
Answer: B
NEW QUESTION 284
Which of the following is the least relevant when preparing the internal audit activity's annual engagement plan?
- A. A rotation of internal audit engagements selected on a time basis.
- B. Coordination with the audit plans of the external auditor.
- C. The organization's current risk priority and exposure.
- D. Senior management's requests for internal audit engagements.
Answer: A
NEW QUESTION 285
In a client satisfaction survey for an internal audit engagement, client management should be asked to assess which of the following factors?
I. Audit team's knowledge of the audited area.
II. Usefulness of the audit results.
III. Quality of management of the internal audit activity.
IV. Clarity of the scope and objectives of the audit engagement.
- A. I, III, and IV only
- B. II and IV only
- C. I, II, and IV only
- D. I and II only
Answer: C
NEW QUESTION 286
Which of the following tests must an internal auditor perform in order to ensure that inbound electronic data interchange (EDI) transactions are received and translated accurately?
I. Computerized tests to assess transaction reasonableness and validity.
II. Review of log books to ensure that transactions are logged upon receipt.
III. Edit checks to identify unusual transactions.
IV. Verification of limitations on the authority of users to initiate specific EDI transactions.
- A. I, II, and III only
- B. II and III only
- C. I and IV only
- D. I, II, III, and IV.
Answer: A
NEW QUESTION 287
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