IIA-CIA-PART2 Online Practice Questions and Answers

Under what circumstances would internal audit not become involved when intentional misconduct is suspected?

A. Management is involved in wrongdoing.

B. Management is running a parallel investigation.

C. Management does not believe a trusted employee could be guilty.

D. Management does not maintain strong internal controls.

An internal auditor is planning an assurance engagement. The auditor first reviews the department's business objectives. What is the next step?

A. Review control activities.

B. Evaluate potential risks.

C. Establish risk management roles.

D. Set the scope of the engagement.

Which of the following conditions should a chief audit executive take into account when deciding if a follow-up audit engagement is necessary?

1.

The reported observations were significant and high risk.

2.

Internal audit resources and the time it will require for follow-up.

3.

Management may not have the resources to take action.

4.

Management has previously decided not to take any action.

A. 1, 2, and 3 only

B. 1, 2, and 4 only

C. 1, 3, and 4 only

D. 2, 3, and 4 only

While developing a risk based audit plan, which of the following sources of information would provide the least value to the chief audit executive?

A. Results from the organization's business process management program.

B. User acceptance testing of the organization's enterprise resource planning application.

C. Risk assessments conducted by the board.

D. Key business strategies adopted by the organization in the strategic plan.

Due to a recent system upgrade, an audit is planned to test the payroll process. Which of the following audit objectives would be most important to prevent fraud?

A. Verify that amounts are correct.

B. Verify that payments are on time.

C. Verify that recipients are valid employees.

D. Verify that benefits deductions are accurate.

An employee in the sales department completes a purchase requisition and forwards it to the purchaser. The purchaser places competitive bids and orders the requested items using approved purchase orders. When the employee receives the ordered items, she forwards the packing slips to the accounts payable department. The invoice for the ordered items is sent directly to the sales department, and an administrative assistant in the sales department forwards the invoices to the accounts payable department for payment. Which of the following audit steps best addresses the risk of fraud in the cash receipts process?

A. Verify that approvals of purchasing documents comply with the authority matrix.

B. Observe whether the purchase orders are sequentially numbered.

C. Examine whether the sales department supervisor approves invoices for payment.

D. Determine whether the accounts payable department reconciles all purchasing documents prior to payment.

Which of the following best describes a risk that is deemed "unacceptable" to the organization?

A. A risk where likelihood and impact are high.

B. A risk where inherent risk exceeds its residual risk.

C. A risk where inherent risk exceeds the tolerance level.

D. A risk where residual risk exceeds the tolerance level.

In which of the following situations would an internal auditor consider the need to outsource competencies and skills?

A. During the inspection of a wind turbine, an internal auditor notices that some replaced parts look used. According to purchase documents, the parts still have a long lifespan.

B. The auditor believes that the audit client's actions contradict the organization's code of conduct. The audit client disagrees and says his actions are for the organization's benefit.

C. An audit team member is allocated to conduct an assurance engagement in the sales unit. However, the same auditor performed an assurance engagement in that area just one year prior.

D. During an inventory count, the auditor ascertained that some goods were missing. The audit client argues that the auditor does not understand how inventory should be counted.

Management has taken immediate action to address an observation received during an audit of the organization's manufacturing process. Which of the following is true regarding the validity of the observation closure?

A. Valid closure requires evidence that ensures the corrected process will function as expected in the future.

B. Valid closure requires the client to address not only the condition, but also the cause of the condition.

C. Valid closure of an observation ensures it will be included in the final engagement report.

D. Valid closure requires assurance from management that the original problem will not recur in the future.

The internal auditors available to perform the engagement do not have sufficient skills related to the area under review. Which of the following is an appropriate action for the chief audit executive to take?

A. Continue the engagement with the available staff, providing more hands-on supervision than usual

B. Limit the objectives and scope of the engagement to align them with the skills available among the current staff.

C. Cosource the performance of the engagement using personnel in the area that will be reviewed to supplement the knowledge of the staff and complete the engagement.

D. Supplement the internal auditors assigned to the engagement by bringing onto the engagement team a consultant who is independent of the area under review and has the missing expertise.