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IIA-CIA-Part2 Practice Questions

Internal Audit Engagement

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Question # 166

According to IIA guidance, which of the following provides additional insight into errors, problems, missed opportunities, or noncompliance to improve the effectiveness and efficiency of an organization's control process?

Options:

A.  

Reperformance.

B.  

Vouching.

C.  

Independent confirmation.

D.  

Root cause analysis.

Discussion 0
Question # 167

An internal auditor finds inconsistencies in a risk area that needs immediate attention. Which of the following actions is most appropriate for the auditor?

Options:

A.  

Prepare an action plan to address the inconsistencies

B.  

Contact regulatory agencies to report the inconsistencies and recommended corrective actions

C.  

Assess the risk of the inconsistencies against the organization's mission

D.  

Issue an interim report to senior management

Discussion 0
Question # 168

An internal auditor is performing an engagement to determine whether quality control checks of electronic gaming systems are performed consistently among a technology company’s factories. Which of the following tests would support the audit engagement objectives?

Options:

A.  

Obtain and review the organization’s policies and procedures to gain an understanding of the quality control checks performed on the gaming systems.

B.  

Perform unannounced onsite observations at factories to help determine how employees perform quality control checks of the gaming systems in real time.

C.  

Meet and discuss with the quality control supervisors at the facilities to obtain information about the processes related to the quality control of gaming systems.

D.  

Use the organization’s manufacturing documentation to create a flowchart that shows how the gaming systems are built to meet the established quality control standards.

Discussion 0
Question # 169

An internal auditor submitted a report containing recommendations for management to enhance internal controls related to investments. To follow up, which of the following is the most appropriate action for the internal auditor to take?

Options:

A.  

Observe corrective measures.

B.  

Seek a management assurance declaration.

C.  

Follow up during the next scheduled audit.

D.  

Conduct appropriate testing to verify management responses.

Discussion 0
Question # 170

It is close to the fiscal year end for a government agency, and the chief audit executive (CAE) has the following items to submit to either the board or the chief executive officer (CEO) for approval. According to IIA guidance, which of the following items should be submitted only to the CEO?

Options:

A.  

The internal audit risk assessment and audit plan for the next fiscal year.

B.  

The internal audit budget and resource plan for the coming fiscal year.

C.  

A request for an increase of the CAE's salary for the next fiscal year.

D.  

The evaluation and compensation of the internal audit team.

Discussion 0
Question # 171

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.

Options:

A.  

1 and 2

B.  

1 and 4

C.  

2 and 3

D.  

3 and 4

Discussion 0
Question # 172

Which of the following represents a ratio that measures short-term debt-paying ability?

Options:

A.  

Debt-to-equity ratio

B.  

Profit margin

C.  

Current ratio

D.  

Times interest earned

Discussion 0
Question # 173

An audit reveals that a manager's spouse is receiving paychecks, but is not employed by the organization. According to IIA guidance, which of the following actions should the internal auditor take?

Options:

A.  

Contact the external auditor and provide all relevant documentation.

B.  

Report the finding to senior management in a timely manner, following the normal chain of command.

C.  

Meet with the local manager to obtain more information on the finding before taking further action.

D.  

Bypass the normal chain of command and contact the board directly to report the finding.

Discussion 0
Question # 174

An internal auditor has discovered that duplicate payments were made to one vendor. Management has recouped the duplicate payments as a corrective action. Which of the following describes management’s action in this case?

Options:

A.  

A condition-based action plan.

B.  

A cause-based action plan.

C.  

A root cause-based action plan.

D.  

An effect-based action plan.

Discussion 0
Question # 175

While reviewing the organization’s financial year-end processes, an internal auditor discovered an erroneous journal entry. If the error is not addressed, it will result in a material misstatement of the financial records. The internal auditor needs an additional four weeks to complete the audit engagement. How should the auditor communicate this finding?

Options:

A.  

The auditor should issue an interim report to management prior to completion of the audit and issuance of the final report.

B.  

The auditor should include this item in the final audit report, marked with an asterisk, indicating that it is a high-risk item.

C.  

The auditor should discuss the finding with the appropriate accounting staff who can make the correction immediately, and if corrected before the engagement is concluded, the finding would not need to be included in the audit report.

D.  

The auditor is obligated to bypass management and immediately report the error directly to regulatory authorities.

Discussion 0
Question # 176

According to IIA guidance, which of the following are appropriate actions for the chief audit executive regarding management's response to audit recommendations?

Options:

A.  

Evaluate and verify management's response, and determine the need and scope for additional work.

B.  

Evaluate and verify management's response, and establish timelines for corrective action by management.

C.  

Oversee the corrective actions undertaken by management, and determine the need and scope for additional work.

D.  

Oversee the corrective actions undertaken by management, and establish timelines for corrective action by management.

Discussion 0
Question # 177

According to IIA guidance, which of re following actions should the internal auditor take immediately after having considered fraud scenarios and identified and prioritized fraud risks?

Options:

A.  

Determine which controls if any are in place to mitigate the fraud risks

B.  

Follow protocol for internal reporting and investigating fraud allegations

C.  

Research frauds that nave occurred t\ similar organizations

D.  

Incorporate the fraud risk assessment into the engagement plan

Discussion 0
Question # 178

The internal audit manager has been delegated the task of preparing the annual internal audit plan for the forthcoming fiscal year. All engagements should be appropriately categorized and presented to the chief audit executive for review. Which of the following would most likely be classified as a consulting engagement?

Options:

A.  

Evaluating procurement department process effectiveness.

B.  

Helping in the design of the risk management program.

C.  

Assessing financial reporting control adequacy.

D.  

Reviewing environmental, social, and governance reporting compliance.

Discussion 0
Question # 179

An internal auditor completed a review of expenses related to the launch of a new project. The auditor sampled 45 transactions approved by a senior project manager and identified 30 with questionable vendor documentation. Which of the following is the most appropriate conclusion for the auditor to include in the audit report?

Options:

A.  

The organization incurred excessive cost overruns that resulted in significant financial and legal risk to the project.

B.  

The organization experienced a potential conflict of interest

C.  

The organization had weaknesses in its review process which allowed questionable transactions with some vendors

D.  

The organization allowed the project to launch without assurance that all transactions were regularly approved

Discussion 0
Question # 180

Which of The following best justifies an internal auditor's decision to issue a preliminary audit report?

Options:

A.  

The internal audit team and audit client have a serious dispute over the scope and objective of the engagement

B.  

The internal audit team expects management to address certain issues immediately due to their severe impact

C.  

The internal audit team anticipates that the formal final audit report would be undesirable for management due to the significance of outlined risks

D.  

The internal audit team would like to issue a clean final audit report without any material observations or risks

Discussion 0
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