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IIA-CIA-Part2 Practice Questions

Internal Audit Engagement

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Question # 181

The internal audit activity is planning an assurance engagement for a foreign subsidiary. According to IIA guidance, which of the following would be included in the preliminary communication to management of the area under review?

Options:

A.  

The scope of the engagement, the estimated time frame, and the names of the auditors.

B.  

The estimated time frame, the names of the auditors, and the resources and travel budget

C.  

The names of the auditors, the resources and travel budget, and the scope of the engagement.

D.  

The resources and travel budget, the scope of the engagement, and the estimated time frame.

Discussion 0
Question # 182

Which of the following constitutes supervisory activity undertaken during the planning phase of an assurance engagement?

Options:

A.  

Ensuring the process owner with the engagement objectives

B.  

Reviewing engagement draft reports

C.  

Ensuring workpapers support audit findings

D.  

Approving audit work programs

Discussion 0
Question # 183

An organization has a health and safety division that conducts audits to meet regulatory requirements. The chief health and safety officer reports directly to the CEO. Which of the following describes an appropriate role for the chief audit executive (CAE) with regard to the organization's health and safety program?

Options:

A.  

The CAE has no role to play, because the chief health and safety officer reports to a senior executive.

B.  

The CAE should coordinate with, and review the work of, the chief health and safety officer to gain an understanding of whether risks related to health and safety are managed properly.

C.  

The CAE should give periodic reports directly to the regulator regarding health and safety issues, as it is the appropriate regulatory oversight body.

D.  

The CAE should hire an independent external specialist to conduct an annual assessment and provide assurance over the effectiveness of the health and safety program and the reliability of its reports.

Discussion 0
Question # 184

Which of the following sampling techniques is typically used when an internal auditor wants to test a large sample for fraud?

Options:

A.  

Stratified sampling

B.  

Haphazard sampling

C.  

Discovery sampling

D.  

Probability-proportional-to-size sampling

Discussion 0
Question # 185

An organization uses the management-by-objectives method, whereby employee performance is based on defined goals. Which of the following statements is true regarding this approach?

Options:

A.  

It is particularly helpful to management when the organization is facing rapid change.

B.  

It is a more successful approach when adopted by mechanistic organizations.

C.  

it is more successful when goal-setting Is performed not only by management, but by all team members, including lower-level staff

D.  

it is particularly successful in environments that are prone to having poor employer-employee relations

Discussion 0
Question # 186

Which of the following is an advantage of utilizing an external fraud specialist in a suspected fraud investigation?

Options:

A.  

increased access to the organization's employees.

B.  

Increased ability to preserve evidence and the chain of command.

C.  

Increased ability to scrutinize the organization's key business processes.

D.  

increased access to the organization's software and proprietary data.

Discussion 0
Question # 187

A senior internal auditor is hired within the internal audit activity for a period of two years before advancing to an operations manager role within the business operations team. When staffing arrangement is being used in this scenario?

Options:

A.  

Comer of competence

B.  

Career model

C.  

Rotational model

D.  

Cosourcing agreement

Discussion 0
Question # 188

An internal auditor of a construction organization found that completed inspection results, required by the organization's policy, were missing from the computer system. Which of the following, if included in the audit report, would demonstrate that the auditor performed a root cause analysis of this observation?

Options:

A.  

Some inspection results were missing from the computer system.

B.  

The results of lengthy inspections were more likely to be omitted from the computer system.

C.  

Flaws in the computer system prevented employees from saving their inspection results.

D.  

Employees did not ensure that inspection results were completed in the computer system.

Discussion 0
Question # 189

A rapidly expanding retail organization continues to be tightly controlled by its original small management team. Which of the following is a potential risk in this vertically centralized organization?

Options:

A.  

Lack of coordination among different business units

B.  

Operational decisions are inconsistent with organizational goals.

C.  

Suboptimal decision-making.

D.  

Duplication of business activities.

Discussion 0
Question # 190

According to Maslow's hierarchy of needs theory, which of the following best describes a strategy where a manager offers an assignment to a subordinate specifically to support his professional growth and future advancement^

Options:

A.  

Esteem by colleagues.

B.  

Self-fulfillment.

C.  

Sense of belonging in the organization

D.  

Job security.

Discussion 0
Question # 191

The internal audit activity of an insurance company is reviewing six of the company’s 11 branches. During the review of the fourth branch that was selected, the internal audit team discovered control breaches that could result in regulatory sanctions if not addressed. How should the internal audit team proceed?

Options:

A.  

Communicate immediately to the relevant regulatory agency the information regarding the company's control breaches along with details of recommended corrective actions to address the issue.

B.  

Complete the branch reviews, ensure that the issue and impact are adequately detailed in the audit report, hold an exit meeting to discuss the issue with branch management, and provide recommendations for corrective actions.

C.  

Have a discussion with branch management on the matter and recommend in an interim audit report that management take appropriate corrective action in order to address the current identified issues.

D.  

Expand the audit to include the branches that were not previously selected and determine whether there are similar control breaches at those branches prior to compiling a comprehensive audit report and reporting the issue to senior management and the board.

Discussion 0
Question # 192

An internal auditor reviewed the tender documents for the procurement of manufacturing equipment and observed the following:

    Tender technical specifications were compliant with internal policies.

    The sole assessment criterion of the tender was economic feasibility.

    All bids were submitted to a designated software and could not be opened before the submission deadline.

    The winner was approved by senior management.

    The winner was selected based on which bidder offered the newest technology.

Which of the following is the most appropriate conclusion?

Options:

A.  

Key controls of the procurement process operate as intended based on the analysis of the specific tender documents.

B.  

IT controls implemented to ensure confidentiality of submitted bids seem to have several deficiencies.

C.  

Management's selection of the winner should be positively acknowledged for focusing on innovative technological solution.

D.  

The principles of transparency and equal treatment of bidders seem to be impaired.

Discussion 0
Question # 193

Which of the following actions should the internal audit activity take during an audit engagement when examining the effectiveness of risk management processes?

Options:

A.  

Evaluate how the organization manages fraud risk.

B.  

Establish procedures for improving risk management processes.

C.  

Ensure risk responses are aligned with industry standards

D.  

Verify that organizational objectives are aligned with each departments objectives.

Discussion 0
Question # 194

An internal audit engagement supervisor approved the engagement work program submitted by an internal auditor and concluded that it satisfied engagement objectives. At the end of the engagement, the engagement supervisor reviewed the completed work program and found numerous deficiencies and inconsistencies in the engagement workpapers. Which of the following should be improved in the process of engagement supervision?

Options:

A.  

The supervisor should regularly review the engagement team's workpapers throughout the engagement, including raising questions and providing guidance.

B.  

The supervisor should evaluate whether the engagement work program includes audit procedures relevant to engagement objectives.

C.  

The supervisor should thoroughly document all concerns prior to signing off the completed workpapers and finalizing the work program.

D.  

The supervisor should issue a satisfaction questionnaire to management of the activity that was under review to understand the root causes of deficient performances.

Discussion 0
Question # 195

An internal auditor wants to obtain management's evaluation of the organizational risk culture. Because there are more than 30 geographically dispersed managers, one-to-one interviews are not possible. Which of the following is the most efficient option for the auditor to adopt?

Options:

A.  

Send out a survey with a few open questions, such as “What is your impression of the risk culture in our organization?”

B.  

Send out a survey with statements and request defined answers, such as “strongly agree” and “strongly disagree.”

C.  

Send out an email asking managers to evaluate the risk culture and provide detailed justification.

D.  

Send out an email asking those who have something to report on organizational risk culture to step forward.

Discussion 0
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