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IIA IIA-CIA-Part2 Exam Syllabus Topics:
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NEW QUESTION 221
An auditor is scheduled to audit payroll controls for a company which has recently outsourced its processing to an information service bureau. What action should the auditor take, considering the outsourcing decision?
- A. Review the controls over payroll in both the company and the service bureau.
- B. Cancel the engagement because the processing is being performed outside of the organization.
- C. Review only the company's controls over data sent to and received from the service bureau.
- D. Review only the controls over payments to the service bureau based on the contract.
Answer: A
Explanation:
Section: Volume A
NEW QUESTION 222
Which of the following would be the most effective method to prevent installation of new equipment that does not meet environmental permit requirements, or to prevent modification of current processes in such a way that they no longer meet permit requirements?
- A. Include the environmental compliance department in the review of proposed process changes and equipment purchases affecting permit requirements.
- B. Require that the environmental compliance department perform regular inspections of the manufacturing facility to identify new equipment or process modifications in progress.
- C. Require that the staff of the environmental compliance department attend monthly safety meetings in different parts of the facility so that they can hear directly from the workers about any changes.
- D. Rely on annual inspections by various regulatory agencies to identify equipment or processes that require a permit.
Answer: A
Explanation:
Section: Volume B
NEW QUESTION 223
An internal auditor provided the following statement about division A's performance during the month: "Because supplies of raw material X were scarce, division A's profits declined by 15 percent."
Which of the following can be validly concluded from the auditor's statement?
I. Division A's production level declined by 15 percent.
II. Division A could have sold more products than it produced.
III.
Division A usually sells all of the products that it produces.
- A. III only
- B. I only
- C. II only
- D. I and II only
Answer: C
NEW QUESTION 224
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 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.
- B. 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.
- C. 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.
- D. 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.
Answer: B
Explanation:
Section: Volume D
NEW QUESTION 225
According to IIA guidance, which of the following activities is most likely to enhance stakeholders' perception of the value the internal audit activity (IAA) adds to the organization?
1.The IAA uses computer-assisted audit techniques and IT applications.
2.The IAA uses a consistent risk-based approach in both its planning and engagement execution.
3.The IAA demonstrates the ability to build strong and constructive relationships with audit clients.
4.The IAA frequently is involved in various project teams and task forces in an advisory capacity.
- A. 1 and 2
- B. 2 and 4
- C. 1 and 3
- D. 3 and 4
Answer: D
NEW QUESTION 226
During which of the following systems development stages would it be most useful for an internal auditor to be involved?
- A. Design and implementation.
- B. Coding and testing.
- C. Testing and user acceptance.
- D. User acceptance and post-implementation.
Answer: A
NEW QUESTION 227
What is the primary purpose of creating a preliminary draft audit report?
- A. To save time during final report writing
- B. To use as a tool for communicating with management of the area under review.
- C. To meet the Standards requirement for developing a draft report prior to issuing a final report
- D. To require that management implements solutions to issues identified during the engagement
Answer: B
NEW QUESTION 228
Which of the following would not be a typical activity for the chief audit executive to perform following an audit engagement?
- A. Implement follow-up procedures to evaluate residual risk.
- B. Report follow-up activities to senior management.
- C. Determine the costs of implementing the recommendations.
- D. Evaluate the extent of improvements.
Answer: C
Explanation:
Section: Volume E
NEW QUESTION 229
An internal auditor recommended that an organization implement computerized controls in its sales system in order to prevent sales representatives from executing contracts in excess of their delegated authority levels. A follow-up review found that the sales system had not been modified, but a process had been implemented to obtain written approval by the vice president of sales for all contracts in excess of $1 million. The chief audit executive (CAE) would be justified in reporting this situation to the organization's board if: I.
In the opinion of the CAE, the level of residual risk assumed by senior management is too high.
II.
Testing of compliance with the new process finds that all new contracts in excess of $1 million have been approved by the vice president of sales.
III.
The cost of modifying the sales system to include a preventive control is less than $100,000.
- A. I only.
- B. III only.
- C. I and III only.
- D. I, II, and III.
Answer: A
NEW QUESTION 230
A manager of one of a retailer's several retail outlets is stealing cash from cash sales, recording the sales as accounts receivable, and subsequently writing off the fictitious accounts receivable as bad debts. Which of the following comparisons would be most effective in signaling the possibility of such a fraud?
- A. Bad debt expense as a percentage of sales, compared to that of previous years.
- B. Bad debt expense as a percentage of sales, compared to that of the other outlets.
- C. Percentage of past-due accounts receivable, compared to that of previous years.
- D. Percentage of past-due accounts receivable, compared to that of the other outlets.
Answer: B
NEW QUESTION 231
Which of the following would be included in an internal audit department's quality assurance and improvement program?
1.Ongoing internal assessments of the performance of the internal audit department.
2.Periodic internal reviews through self-assessments.
3.Assessments conducted by a qualified external reviewer at least once every five years.
- A. 1, 2, and 3
- B. 1 only
- C. 2 and 3 only
- D. 1 and 2 only
Answer: A
NEW QUESTION 232
A key to effective benchmarking in a consulting engagement is identifying the issues that can be:
- A. Measured and controlled by the engagement client.
- B. Discussed with the board or audit committee.
- C. Shared with all internal audit customers.
- D. Reviewed by all internal audit staff members.
Answer: A
NEW QUESTION 233
An audit of an organization's claims department determined that a large number of duplicate payments had been issued due to problems in the claims processing system. During the exit conference, the vice president of the claims department informed the auditors that attempts to recover the duplicate payments would be initiated immediately and that the claims processing system would be enhanced within six months to correct the problems. Based on this response, the chief audit executive should:
- A. Schedule a follow-up engagement within six months to assess the status of corrective action.
- B. Monitor the status of corrective action and schedule a follow-up engagement when appropriate.
- C. Discuss the findings with the audit committee and ask the committee to determine the appropriate follow-up action.
- D. Adjust the scope of the next regularly scheduled audit to assess controls within the claims processing system.
Answer: B
NEW QUESTION 234
Which of the following techniques could be used to evaluate the effectiveness of changes to the operation of a computer help line?
- A. Baseline measurements.
- B. Benchmarking.
- C. Quality circles.
- D. Walk-throughs.
Answer: A
NEW QUESTION 235
What would be used to determine the collectability of accounts receivable balances?
- A. An aged accounts receivable listing.
- B. The file of related shipping documents.
- C. Positive accounts receivable confirmations.
- D. Negative accounts receivable confirmations.
Answer: A
Explanation:
Section: Volume A
NEW QUESTION 236
Which of the following is the most common method management can use to manage risk within its risk appetite?
- A. Frequent communication of risk appetite for operating personnel.
- B. Continuous evaluations and audits.
- C. Implementation of controls.
- D. Use of risk registers and dashboard.
Answer: C
NEW QUESTION 237
Which of the following factors is least essential to a successful control self-assessment workshop?
- A. Group dynamics.
- B. Prior planning.
- C. Facilitation training.
- D. Voting technology.
Answer: D
NEW QUESTION 238
Which of the following is true of engagement recommendations?
I. Specific suggestions for implementation must be included.
II. The internal auditor's observations and conclusions may serve as the basis.
III. Actions to correct existing conditions or improve operations may be included.
IV.
Approaches to correcting or enhancing performance may be suggested.
- A. III only
- B. I, III, and IV only
- C. I only
- D. II, III, and IV only
Answer: D
NEW QUESTION 239
Which of the following is a justifiable reason for omitting advance client notice when planning an audit engagement?
- A. The engagement includes audit assurance procedures such as sensitive or restricted asset verifications.
- B. The audit engagement has already been communicated and approved through the annual audit plan.
- C. Advance notice may result in management making corrections to reduce the number of potential deficiencies.
- D. Previous management action plans addressing prior internal audit recommendations remain incomplete.
Answer: A
NEW QUESTION 240
According to IIA guidance, which of the following is true regarding audit supervision?
1. Supervision should be performed throughout the planning, examination, evaluation, communication, and follow-up stages of the audit engagement.
2. Supervision should extend to training, time reporting, and expense control, as well as administrative matters.
3. Supervision should include review of engagement workpapers, with documented evidence of the review.
- A. 1 and 3 only
- B. 1, 2, and 3
- C. 2 and 3 only
- D. 1 and 2 only
Answer: B
NEW QUESTION 241
A performance audit engagement typically involves:
- A. Appraisal of the environment and comparison against established criteria.
- B. Review of financial statement information, including the appropriateness of various accounting treatments.
- C. Evaluation of organizational and departmental structures, including assessments of process flows.
- D. Tests of compliance with policies, procedures, laws, and regulations.
Answer: A
NEW QUESTION 242
Because of a new marketing initiative, an organization has reduced requirements for extending credit to new customers. As a result, outstanding accounts receivable as a percentage of revenue has increased significantly during the past two years. Which of the following would be least useful in monitoring this finding?
- A. Updates from the controller regarding the status of corrective actions.
- B. Updates from the information technology division regarding development of a new accounts receivable system.
- C. Updates from the credit and marketing personnel tasked with reevaluating credit policies.
- D. Updates from the manager of accounts receivable regarding collection of outstanding receivables.
Answer: B
NEW QUESTION 243
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