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IIA-CIA-Part2 Practice Questions

Internal Audit Engagement

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Question # 106

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 # 107

While reviewing the workpapers and draft report from an audit engagement, the chief audit executive (CAE) found that an important compensating control had not been considered adequately by the audit team when it reported a major control weakness. Therefore, the CAE returned the documentation to the auditor in charge for correction. Based on this information, which of the following sections of the workpapers most likely would require changes?

Effect of the control weakness.

Cause of the control weakness.

Conclusion on the control weakness.

Recommendation for the control weakness.

Options:

A.  

1, 2, and 3.

B.  

1, 2, and 4.

C.  

1, 3, and 4.

D.  

2, 3, and 4.

Discussion 0
Question # 108

During follow-up. the internal auditor discovered that operational management did not implement effective actions to address a significant control breach If the issue is left unresolved it may result in regulatory sanctions and damage the organization ' s reputation What is the most appropriate next step for the chief audit executive to lake?

Options:

A.  

Report the matter to the board

B.  

Implement the recommended control to address the exposure

C.  

Discuss the matter with senior management

D.  

Ask the regulatory agency to persuade management to address the issue

Discussion 0
Question # 109

The internal audit activity has requested that new vendor information be summarized once per week in a single report, and that all invoices each week for these vendors be automatically flagged in the invoice processing system. Which of the following computerized audit techniques is the internal audit activity most likely applying?

Options:

A.  

Enabling continuous auditing.

B.  

Employing generalized audit software.

C.  

Facilitating electronic workpapers.

D.  

Using machine learning.

Discussion 0
Question # 110

Which procedure should an internal auditor perform to determine the audit objective?

Options:

A.  

Meet with the board to discuss emerging issues and concerns

B.  

Conduct a risk assessment of the area under review

C.  

Establish the boundaries of the engagement

D.  

Outline what will be included in the review

Discussion 0
Question # 111

Which of the following best demonstrates that the internal audit activity is using due professional care?

Options:

A.  

The internal audit activity reports directly to the board on the engagements it performs.

B.  

Internal auditors undertake the necessary training to complete their audit work.

C.  

The completion of engagements is based on the assumption that fraudulent activities may exist.

D.  

Internal auditors consider the use of technology-based audit and other data analysis techniques

Discussion 0
Question # 112

Which of the following components should be included in an audit finding?

1. The scope of the audit.

2. The standard(s) used by the auditor to make the evaluation.

3. The engagement ' s objectives.

4. The factual evidence that the internal auditor found in the course of the examination.

Options:

A.  

1 and 2

B.  

1 and 3 only

C.  

2 and 4

D.  

1, 3, and 4

Discussion 0
Question # 113

An organization must maintain a current ratio of at least 1.2 to comply with debt covenants. Its current ratio is now 0.9. Which year-end transaction can increase the current ratio?

Options:

A.  

Paying off an overdraft debt using funds from another bank current account.

B.  

Purchasing inventory using funds from long-term bank loans.

C.  

Acquiring a new car through leasing.

D.  

Factoring short-term accounts receivable in exchange for cash.

Discussion 0
Question # 114

Which of the following is most likely the subject of a periodic report from the chief audit executive to the board?

Options:

A.  

A complete, accurate, and comprehensive account of engagement observations and recommendations.

B.  

Oversight of the coordination between the internal audit activity and independent outside auditors.

C.  

The internal audit activity ' s purpose, authority, responsibility, and performance relative to plan.

D.  

Management ' s assertions regarding the system of internal controls.

Discussion 0
Question # 115

In which of the following populations would the internal auditor most likely choose to use a stratified sampling approach?

Options:

A.  

Inventory comprised of the same items stored in different warehouses

B.  

Batches of materials that must be confirmed as meeting quality standards

C.  

Revenue that is earned by an organization through cash receipts or as receivable.

D.  

Tax reports submitted to meet the requirements of the local taxation authority

Discussion 0
Question # 116

While performing fieldwork for an assurance engagement, a member of the internal audit team identified a key control that was not identified during the planning phase of the engagement Which of the following actions by the internal auditor would be most appropriate?

Options:

A.  

Promptly adjust the audit work program to include tests that address the newly identified control and notify the other audit team members of the change

B.  

Proceed with the current audit work program because the engagement scope has already been finalized but plan to address the newly identified control as part of the follow up engagement

C.  

Adjust the audit work program to account for the new control, but only with approval from the engagement supervisor

D.  

Discuss the control with management of the area under review and seek their approval prior to including the control in the current audit engagement

Discussion 0
Question # 117

An internal auditor e assessing the design of a control and has identified a potential significant weakness. The auditor shared his concern with management however management does not agree that the weakness is significant. What should the internet auditor do next?

Options:

A.  

Perform additional audit work to better articulate the risk

B.  

Report the finding that management has accepted a level of risk that is unacceptable.

C.  

Proceed to testing how effectively the control is opening.

D.  

Because the design weakness has been identified no additional audit work is needed

Discussion 0
Question # 118

An organization obtains maintenance personnel from a third-party service provider. The third-party service provider submits monthly timetables of contracted maintenance personnel and bills the organization on an hourly basis. Which of the following will most likely help an internal auditor validate the number of hours billed by the third-party service provider?

Options:

A.  

Conduct a due diligence review of the third-party service provider

B.  

Ask the third-party service provider to provide internal time-keeping records

C.  

Obtain access logs from entrances to the organization ' s facilities

D.  

Interview the manager responsible for contracting external personnel

Discussion 0
Question # 119

According to IIA guidance which of the following statements is true regarding heat maps?

Options:

A.  

A heat map sets likelihood to have higher priority than impact.

B.  

A heat map sets impact to have higher priority than likelihood.

C.  

A heat map recognizes that the priority of impact and likelihood can vary.

D.  

A heat map recognizes impact and likelihood as equally important

Discussion 0
Question # 120

Which of the following activities demonstrates an example of the chief audit executive performing residual risk assessment?

Options:

A.  

Cost-benefit analysis of management not implementing a recommendation to address an observation.

B.  

Inquiry of corrective action to be completed within a certain period.

C.  

Reporting the status of every observation for every engagement in a detailed manner.

D.  

Soliciting management’s feedback after completion of the audit engagement.

Discussion 0
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