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IIA-CIA-Part2 Practice Questions

Internal Audit Engagement

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Question # 61

Following an IT systems audit, management agreed to implement a specific control in one of the IT systems. After a period, the internal auditor followed up and learned that management had not implemented the agreed management action due to the decision to move to another IT system that has built-in controls, which may address this risks highlighted by the Internal audit Which of the following Is the most appropriate action to address the outstanding audit recommendation?

Options:

A.  

The auditor examines the system documentation of the new system to verify that the risk has been addressed in the new system, then reports to senior management the closure of the issue.

B.  

The auditor accepts managements explanation that the previously identified issue is adequately addressed by the new IT system, as management understands the concern and is most knowledgeable about the new system, and closes the outstanding issue.

C.  

The auditor advises management that replacing the IT system does not dismiss the prior obligation to implement the agreed action plan, and escalates the issue to senior management and the board.

D.  

The auditor requires management to provide details regarding the process for selecting the new IT system and whether other systems were evaluated, and closure of the issue would depend on the new information provided.

Discussion 0
Question # 62

Which of the following statements is true regarding the final assurance engagement report issued to management?

Options:

A.  

Ratings are only used to assess the condition of an observation made by an internal auditor.

B.  

Audit findings may be communicated to management prior to issuance of the final approved audit report.

C.  

Communications must be relevant logical, and free from errors before they are disseminated.

D.  

The audit report must present the information in the following order (1) audit scope, (2) engagement objectives, and (3) engagement results

Discussion 0
Question # 63

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 # 64

Which of the following would most likely cause an internal auditor to consider adding fraud work steps to the audit program?

Options:

A.  

Improper segregation of duties.

B.  

Incentives and bonus programs.

C.  

An employee's reported concerns.

D.  

Lack of an ethics policy.

Discussion 0
Question # 65

A bakery chain has a statistical model that can be used to predict daily sales at individual stores based on a direct relationship to the cost of ingredients used and an inverse relationship to rainy days. What conditions would an auditor look for as an indicator of employee theft of food from a specific store?

Options:

A.  

On a rainy day, total sales are greater than expected when compared to the cost of ingredients used.

B.  

On a sunny day, total sales are less than expected when compared to the cost of ingredients used.

C.  

Both total sales and cost of ingredients used are greater than expected.

D.  

Both total sales and cost of ingredients used are less than expected.

Discussion 0
Question # 66

A chief audit executive (CAE) a developing a work program for an upcoming engagement that will review an organization’s small contracting services. When of the following would the CAT need to consider most when developing the work program?

Options:

A.  

The contracting department's staffing changes within the last year

B.  

The certifications held by the internal auditors assigned to the engagement

C.  

The internal audit activity's increase n budget and staffing for the year

D.  

The organization's recent changes to how it processes payments

Discussion 0
Question # 67

Which of the following evaluation criteria would be the most useful to help the chief audit executive determine whether an external service provider possesses the knowledge, skills, and other competencies needed to perform a review?

Options:

A.  

The financial interest the service provider may have in the organization.

B.  

The relationship the service provider may have had with the organization or the activities being reviewed.

C.  

Compensation or other incentives that may be applicable to the service provider.

D.  

The service provider's experience in the type of work being considered.

Discussion 0
Question # 68

An audit client responded to recommendations from a recent consulting engagement. The client indicated that several recommended process improvements would not be implemented. Which of the following actions should the internal audit activity take in response?

Options:

A.  

Escalate the unresolved issues to the board, because they could pose significant risk exposures to the organization.

B.  

Confirm the decision with management and document this decision in the audit file.

C.  

Document the issue in the audit file and follow up until the issues are resolved.

D.  

Initiate an assurance engagement on the unresolved issues.

Discussion 0
Question # 69

Which of the following is most appropriate for internal auditors to do during the internal audit recommendations monitoring process?

Options:

A.  

Report the monitoring status to senior management when requested.

B.  

Assist management with implementing corrective actions.

C.  

Determine the frequency and approach to monitoring

D.  

Include all types of observations in the monitoring process

Discussion 0
Question # 70

Which of the following risk assessment approaches involves gathering data from work team representing different levels of an organisation?

Options:

A.  

Surveys

B.  

Management produced analysis 0

C.  

Facilitated team workshops

D.  

Weighted risk factors

Discussion 0
Question # 71

An internal auditor is conducting an initial risk assessment of an audit area and wants to assess management's compliance with privacy laws for safeguarding customer information stored on the organization's servers. Which course of action is appropriate for this phase of the engagement?

Options:

A.  

Solicit the services of a specialist information systems auditor

B.  

Obtain the most current approved copies of the organization's privacy policy

C.  

Consult with legal counsel about new privacy laws to establish appropriate criteria

D.  

Consider the detection risk of noncompliance with the laws

Discussion 0
Question # 72

According to IIA guidance, which of the following activities are typically primary objectives of engagement supervision?

Options:

A.  

Enable training and development of staff, identify engagement objectives, and assign responsibilities to individual auditors.

B.  

Identify engagement objectives, assign responsibilities to individual auditors, and approve the engagement program.

C.  

Assign responsibilities to individual auditors, approve the engagement program, and enable training and development of staff.

D.  

Approve the engagement program, enable training and development of staff, and identify engagement objectives.

Discussion 0
Question # 73

For an action plan to be effective, it should be designed primarily to address which of the following elements of an observation?

Options:

A.  

Condition

B.  

Root cause

C.  

Criteria

D.  

Recommendation

Discussion 0
Question # 74

The chief audit executive (CAE) for a manufacturing company included in this year s audit plan a review of the company's laboratory, using an experienced external service provider. The audit plan was approved by the audit committee without any changes At the time of engaging the external service provider, the CAE also secured the approval from the CEO. Who is responsible for ensuring that the conclusions reached for this exercise are adequately supported7

Options:

A.  

Audit committee

B.  

CEO

C.  

CA

E.  

D.  

External service provider

Discussion 0
Question # 75

During an audit of suspense accounts the internal auditor found that there were no written policies on how suspense accounts should be treated. The auditor also found that suspense account balances were cleared once per week, not daily. Which of the following is the most appropriate first response by the auditor?

Options:

A.  

The auditor should conclude that suspense accounts were not being cleared on a timely basis because they should be cleared daily

B.  

The auditor should ask management whether any undocumented policies exist and. if so, determine whether they are adequate

C.  

The auditor should conclude that the clearing of suspense accounts was timely and appropriate because weekly clearing is sufficient.

D.  

The auditor should rely on his professional judgment and experience to develop criteria for evaluating the existing controls over suspense accounts

Discussion 0
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