[Oct 19, 2022] Pass IIA IIA-CIA-Part2 Exam Info and Free Practice Test
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NEW QUESTION 330
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. Select a sample of individual store prices and compare them with the sales entered on the cash register for the same items.
- B. Schedule a surprise inventory audit to include a physical inventory and investigate areas of inventory shrinkage.
- C. Use an integrated test facility (ITF) to compare individual sales transactions with test transactions submitted through the ITF and investigate all differences.
- D. 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.
Answer: B
Explanation:
Section: Volume A
NEW QUESTION 331
The internal audit activity performs the following sequence of risk management activities: identification, analysis, and evaluation. According to IIA guidance, which of the following assurance approaches does this describe?
- A. Enterprise-wide risk management approach.
- B. Key principles approach.
- C. Maturity model approach.
- D. Process elements approach.
Answer: D
NEW QUESTION 332
A chief audit executive (CAE) has decided to add an engagement to the current audit plan which will exceed available audit resources. Which of the following is the best course of action for the CAE to take?
- A. Seek approval from senior management and the board of directors for the plan change and advise them of the issue of limited resources.
- B. Present the plan change to senior management and request additional resources before going to the board of directors.
- C. Add this change to the plan and request senior management to indicate which other engagement should be deleted to keep the overall plan within resource constraints.
- D. Immediately seek additional resources from senior management and the board of directors to meet the needs of the organization.
Answer: A
NEW QUESTION 333
As a result of a recent discovery of false information on employment applications, an internal auditor has reviewed hiring procedures. Which of the following represents a weakness in the control system?
I. Applicants are not required to have their signed applications legally authenticated.
II. Applicants' educational information is not validated with the educational institution before employment is offered.
III. Information related to applicants' long-term work history is not validated before employment is offered.
- A. III only
- B. I, II, and III
- C. I and II only
- D. II and III only
Answer: D
NEW QUESTION 334
According to IIA guidance, which of the following statements are true regarding the internal audit plan?
1. The audit plan is based on an assessment of risks to the organization.
2. The audit plan is designed to determine the effectiveness of the organization's risk management process.
3. The audit plan is developed by senior management of the organization.
4. The audit plan is aligned with the organization's goals.
- A. 3 and 4 only
- B. 1, 3, and 4
- C. 1 and 2 only
- D. 1, 2, and 4
Answer: D
Explanation:
Section: Volume E
NEW QUESTION 335
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.
Answer: D
Explanation:
Section: Volume D
NEW QUESTION 336
Which of the following factors would increase the confidence level in a variables sampling plan?
I. A larger sample size.
II. A stratified sample.
III. A larger standard deviation.
- A. I, II, and III
- B. I and III only
- C. I and II only
- D. II and III only
Answer: C
Explanation:
Section: Volume A
NEW QUESTION 337
A chief audit executive (CAE) reviews the supervision of an internal audit engagement Which of the following would most likely assure the CAE that the engagement had adequate supervision?
- A. The supervisor reviews and initials internal audit workpapers for the engagement
- B. The engagement supervisor has an open door pokey for audit team members to discuss concerns
- C. The supervisor reviews weekly progress reports from the audit team members
- D. The supervisor meets periodically with management in the reviewed area to get feedback during the engagement.
Answer: A
NEW QUESTION 338
When developing the scope of an audit engagement, which of the following would the internal auditor typically not need to consider?
- A. The need and availability of automated support.
- B. The operational and geographic boundaries.
- C. The potential impact of key risks.
- D. The expected outcomes and deliverables.
Answer: C
Explanation:
Section: Volume E
NEW QUESTION 339
Productivity statistics are provided quarterly to a company's board of directors. An auditor checked the ratios and other statistics in the four most recent reports. The auditor used scratch paper and copies of the board reports to verify the accuracy of computations and compared the data used in the computations with supporting documents. The auditor wrote a note describing this work for the workpapers and then discarded the scratch paper and report copies. The auditor's note stated:
"The ratios and other statistics in the quarterly board reports were checked for the last four quarters, and appropriate supporting documents were examined. All amounts appear to be appropriate."
In this situation:
- A. The auditor should have included the scratch paper in the workpapers.
- B. The auditor's workpapers are not sufficient to facilitate an efficient review of the auditor's work.
- C. Four quarters is not a large enough sample on which to base a conclusion.
- D. The auditor should have considered whether the information in the board report was compiled efficiently.
Answer: B
NEW QUESTION 340
Which of the following is most appropriate when conducting an interview during the course of a fraud investigation?
- A. Schedule the interview well in advance.
- B. Explain the detailed purpose to the interviewee.
- C. Assume that the interviewee is guilty.
- D. Have a witness present during the interview.
Answer: D
Explanation:
Section: Volume C
NEW QUESTION 341
Which of the following is an example of the verification of internal documentary evidence?
- A. Reconciling a vendor's month-end statement.
- B. Vouching a copy of a sales invoice to receivables.
- C. Recalculating a customer's purchase order.
- D. Reviewing a carrier's bill of lading.
Answer: B
NEW QUESTION 342
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. 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.
- 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. 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.
Answer: C
NEW QUESTION 343
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. I and II only
- D. II only
Answer: D
Explanation:
Section: Volume A
NEW QUESTION 344
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. Test a sample of payroll changes to ensure that they were approved by the assistant director before being processed.
- B. Review the engagement program to ensure testing of direct deposits to employee bank accounts is adequately covered.
- C. Continue to follow the engagement program because the engagement scope and objectives have already been discussed with management.
- D. Recommend to the chief audit executive that a fraud investigation be started.
Answer: B
NEW QUESTION 345
CORRECT TEXT
A fast-food company is developing a computer simulation involving arrival time at a drive-through restaurant. The distribution for arrival times is:
Time Single-Digit Random Between Arrivals Probability Number Assigned 1 minute
0.1 0 2 minutes
0.2 1, 2 3 minutes 0.3
3, 4, 5
4 minutes
0.4
6, 7, 8, 9
Six random numbers are selected to represent the arrival of six cars: 1, 6, 9, 0, 5, 6. The mean time between arrivals for these cars, in this run of the simulation model, is:
- A. 2 minutes.
- B. 1 minute.
- C. 3 minutes.
- D. 4 minutes.
Answer: C
NEW QUESTION 346
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. Current level of performance of the human resources department.
- B. Adequacy of controls over hiring new employees.
- C. Degree of compliance with human resources policies.
- D. Sufficiency of controls over payroll rate increases.
Answer: A
Explanation:
Section: Volume C
NEW QUESTION 347
During an audit of the accounts receivable (AR) process, an internal auditor noted that reconciliations are still not performed regularly by the AR staff, a recommendation that was made following a previous audit.
Monitoring by the financial reporting function has failed to detect the shortcoming. Both the financial reporting function and AR report to the controller, who is responsible for implementing action plans. Which of the following supports the internal auditor's decision to combine both observations into one reported finding?
- A. The observation was made during the same audit, and the action plan has a common owner.
- B. The observation relates to the same control activity within a common process.
- C. The observation has a common process, and the action plan for the observation has a common owner.
- D. The observation has a common control, and it was noted in a prior audit.
Answer: C
Explanation:
Section: Volume E
NEW QUESTION 348
After becoming aware of control weaknesses indicating that a fraud could have been committed, which of the following actions should an internal auditor take next?
- A. Issue a written report identifying the control weaknesses.
- B. Recommend that a fraud investigation be conducted involving internal auditors, lawyers, investigators, security personnel, and other specialists, as appropriate.
- C. Notify external auditors of the suspicion that fraud has been committed.
- D. Perform tests directed toward the identification of other fraud indicators.
Answer: D
NEW QUESTION 349
According to IIA guidance, which of the following accurately describes the responsibilities of the chief audit executive with respect to the final audit report?
1.Coordinate post-engagement conferences to discuss the final audit report with management.
2.Include management's responses in the final audit report.
3.Review and approve the final audit report.
4.Determine who will receive the final audit report.
- A. 1 and 2
- B. 2 and 3
- C. 1 and 4
- D. 3 and 4
Answer: D
NEW QUESTION 350
The chief audit executive (CAE) should determine whether the internal audit activity has confirmed the status of all of management's corrective actions Doing so would help the CAE assess which of the following?
- A. Residual risk
- B. Inherent risk
- C. Compliance risk
- D. Disclosure risk.
Answer: A
NEW QUESTION 351
An internal audit activity implemented an integrated test facility to test payroll processing. The auditors identified the key controls and processing steps built into the computer program and developed test data to test them. The auditors submitted test transactions throughout the year and did not find any differences in their test results. The auditors can conclude that:
- A. The computer application and its control procedures were processing payroll transactions correctly during the past year.
- B. All of the above.
- C. The system is properly capturing the hours worked by employees during the year and the hours have been properly submitted to payroll and processed correctly.
- D. All employees were correctly paid during the year and their pay was correctly computed.
Answer: A
NEW QUESTION 352
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