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IIA-CIA-Part2 Practice Questions

Internal Audit Engagement

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Question # 121

Which of the following statements concerning workpapers is the most accurate?

Options:

A.  

The organization and the format of workpapers is the same for all engagements

B.  

The extent of what is included in workpapers is a matter of professional judgment

C.  

Workpapers should be complete so that every conceivable question that can be raised should be answered

D.  

Copies of operational managements records should not be included, but referenced so that they can be located

Discussion 0
Question # 122

An internal auditor recommended that an organization implement computerized controls in its sales system in order to prevent sales representatives from executing contracts in excess of their delegated authority levels A follow-up review found that the sales system had not been modified, but a process had been implemented to obtain written approval by the vice president of sales for all contracts in excess of S1 million The chief audit executive (CAE) would be justified in reporting this situation to the organization ' s board under which of the tollowing circumstances ' ?

1. In the opinion of the CAE the level of residual risk assumed by senior management is too high

2. Testing of compliance with the new process finds that all new contracts in excess of $1 million have been approved by the vice president of sales

3. The cost of modifying the sales system to include a preventive control is less than S100.000

Options:

A.  

1 only

B.  

3 only

C.  

1 and 3 only

D.  

1, 2, and3

Discussion 0
Question # 123

Which of the following would be the most effective fraud prevention control?

Options:

A.  

Email alert sent to management for checks issued over S100.000.

B.  

installation of a video surveillance system in a warehouse prone to inventory loss

C.  

New hire training to explain fraud and employee misconduct.

D.  

Daily report that Identifies unsuccessful system log-in attempts

Discussion 0
Question # 124

Which of the following statements generally true regarding audit engagement planning?

Options:

A.  

The best source tor detailed process information is senior management

B.  

Audit objectives should be general and do not change.

C.  

Computer-assisted audit techniques are typically not useful during engagement planning

D.  

Internal auditors should prepare a dented audit program for testing controls

Discussion 0
Question # 125

A team of internal auditors is assigned to audit the employee relations process in an organization, which includes employee conduct and disciplinary hearings. Which of the following audit approaches would provide the auditors with the best evidence to determine the degree to which disciplinary decisions are complying with documented policy?

Options:

A.  

Review a random sample of concluded disciplinary reports to assess how the policy was applied in each case.

B.  

Interview a sample of impacted employees for their opinions on the clarity and fairness of the policy.

C.  

Observe several disciplinary hearings to determine whether they are in compliance with the policy.

D.  

Conduct an interview to assess the disciplinary hearing chairman’s understanding of the policy and its appropriate use.

Discussion 0
Question # 126

An internal audit activity plans its engagements based on an organization-wide risk assessment. According to IIA guidance, which of the following statements is true regarding the required frequency of the risk assessment?

Options:

A.  

The risk assessment must be performed at least quarterly.

B.  

The risk assessment must be performed at least annually.

C.  

The risk assessment must be performed at least once every five years, in alignment with the internal audit activity ' s quality assurance and improvement program.

D.  

There is no specific requirement; a risk assessment should be performed as needed to account for changes in the business environment.

Discussion 0
Question # 127

Which of the following statements best demonstrates application of due professional care during an assurance engagement?

Options:

A.  

The engagement detected irregularities and noncompliance instances.

B.  

The engagement supervisor had no significant comments in the supervisory review.

C.  

The audit procedures were systematically planned: executed, and documented.

D.  

The engagement objectives were designed to assist the engagement client

Discussion 0
Question # 128

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 # 129

The internal audit activity has become aware of public complaints regarding the sales practices of telephone marketing personnel in a large organization. The internal auditors decide to review a sample of all complaints within the last three months to ensure they are reflective of current marketing practices. Which of the following best describes this sampling technique?

Options:

A.  

Judgmental sampling

B.  

Random sampling

C.  

Discovery sampling

D.  

Statistical sampling

Discussion 0
Question # 130

The chief audit executive (CAE) of a small internal audit activity (IAA) plans to test conformance with the Standards through a quality assurance review. According to the Standards, which of the following are acceptable practice for this review?

1. Use an external service provider.

2. Conduct a self-assessment with independent validation.

3. Arrange for a review by qualified employees outside of the IA

A.  

4. Arrange for reciprocal peer review with another CA

E.  

Options:

A.  

1 and 2

B.  

2 and 4

C.  

1, 2, and 3

D.  

2, 3, and 4

Discussion 0
Question # 131

According to IIA guidance, which of the following would not be a consideration for the internal audit activity (IAA) when determining the need to follow-up on recommendations?

Options:

A.  

Degree of effort and cost needed to correct the reported condition.

B.  

Complexity of the corrective action.

C.  

Impact that may result should the corrective action fail.

D.  

Amount of resources required to conduct the follow-up activities.

Discussion 0
Question # 132

According to IIA guidance, when of the Mowing statements is true regarding an engagement supervisor ' s use of review notes?

Options:

A.  

The engagement supervisor ' s review notes should be retained m the final documental or even after they are addressed.

B.  

The engagement supervisor ' s review notes cannot be used as evidence of engagement supervision

C.  

The engagement supervisor ' s review notes could be cleared from all final documentation after they are addressed

D.  

The engagement supervisor ' s review notes must be maintained in a checklist separate from tie final documentation

Discussion 0
Question # 133

The internal audit function is performing an assurance engagement on the organization’s environmental, social, and governance (ESG) program. The engagement objective is to determine whether the ESG program’s activities are meeting the program’s established goals. The internal audit function has completed a risk and control assessment of the ESG program ' s activities. What is the appropriate next step?

Options:

A.  

Conclude whether the ESG program ' s activities are meeting the established goals

B.  

Communicate the results of the assessment to senior management

C.  

Develop recommendations based on the results of the assessment

D.  

Perform testing on the activities selected based on the assessment

Discussion 0
Question # 134

Which of the following statements is false regarding audit criteria?

Options:

A.  

Audit criteria should be consistent across audit assignments.

B.  

Audit criteria should represent reasonable standards against which to assess existing conditions.

C.  

Audit criteria should provide flexibility but allow identification of nonadherence.

D.  

Audit criteria should equate to good or acceptable management practices.

Discussion 0
Question # 135

An accounts payable clerk has recently transferred into the internal audit activity and has been assigned to an engagement related to accounts payable processes for which he was previously responsible Which of the following is the best action for the new internal auditor to take?

Options:

A.  

If it is an assurance engagement, accept the assignment because direct knowledge of the existing accounts payable processes will provide depth and add more value

B.  

If it is a consulting engagement, decline the assignment and ask to be reassigned, because in a consulting engagement the auditor must not assess operations for areas in which they were previously responsible.

C.  

if it is a consulting engagement, accept the assignment because direct knowledge of the existing accounts payable processes will provide depth and add more value

D.  

If it is an assurance engagement, accept the assignment because the chief audit executive had knowledge of the internal auditor ' s previous role when this engagement was assigned.

Discussion 0
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