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IIA-CIA-Part2 (Practice of Internal Auditing) certification exam is one of the most recognized certifications in the field of internal auditing. Practice of Internal Auditing certification is offered by the Institute of Internal Auditors (IIA) and is designed to provide the candidates with the knowledge and skills required to conduct effective and efficient internal audits. IIA-CIA-Part2 exam measures the candidate's knowledge of the core principles of internal auditing, risk management, governance, control, and compliance.
NEW QUESTION # 154
A payroll clerk enters payroll transactions into the general ledger. The staff accountant reconciles the payroll ledgers. The payroll manager issues the manual payroll checks. The checks are maintained in a locked cabinet. The chief financial officer secures the keys to the cabinet. The payroll clerk distributes the manual checks.
The payroll manager reconciles the bank statements monthly. Which of the following audit steps best addresses the risk of fraud in the payroll process?
- A. Examine whether the payroll manager approves the reconciliations of ledgers.
- B. Vouch a sample of items on bank reconciliations to supporting documentation.
- C. Determine whether the cabinet keys are secured properly.
- D. Determine whether an approved list of voided checks exists.
Answer: B
Explanation:
Section: Volume D
NEW QUESTION # 155
Which of the following would be the best audit procedure to use to determine if a division's unusually high sales and gross margin for November and December were the result of fraudulently recorded sales?
- A. Confirm accounts receivable balances with customers.
- B. Compare sales and gross margin totals with those of the previous ten months and the first month of the following year.
- C. Trace a sample of shipping documents to related sales invoices to verify proper billing.
- D. Use regression analysis techniques to estimate the sales and cost of goods sold for November and December.
Answer: A
Explanation:
Section: Volume B
NEW QUESTION # 156
During an audit of the accounts receivable (AR) process, an internal auditor noted that reconciliations are still not performed regularly by the AR staff, a recommendation that was made following a previous audit.
Monitoring by the financial reporting function has failed to detect the shortcoming. Both the financial reporting function and AR report to the controller, who is responsible for implementing action plans. Which of the following supports the internal auditor's decision to combine both observations into one reported finding?
- A. The observation relates to the same control activity within a common process.
- B. The observation has a common process, and the action plan for the observation has a common owner.
- C. The observation has a common control, and it was noted in a prior audit.
- D. The observation was made during the same audit, and the action plan has a common owner.
Answer: B
NEW QUESTION # 157
In which of the following ways can the internal audit activity new engagement opportunities?
- A. By defining activities by business processes.
- B. By defining activities by the organization chart.
- C. By looking at activities by businesses cost centers.
- D. By looking external factors such as product complaints.
Answer: D
NEW QUESTION # 158
An audit identified a number of weaknesses in the configuration of a critical client/server system. Although some of the weaknesses were corrected prior to the issuance of the audit report, correction of the rest will require between six and 18 months for completion. Consequently, management has developed a detailed action plan, with anticipated completion dates, for addressing the weaknesses. Which of the following is the most appropriate course of action for the chief audit executive to take?
- A. Schedule a follow-up audit engagement to assess the status of corrective action.
- B. Evaluate statistics related to unplanned system outages, unauthorized access attempts, and denials of service to assess the effectiveness of corrections.
- C. Assess the adequacy of the action plan and monitor key dates and deliverables.
- D. Reassign information systems auditors to assist the information technology department in correcting the weaknesses.
Answer: C
NEW QUESTION # 159
Which of the following would constitute a violation of the IIA Code of Ethics?
- A. An internal auditor has no ambitions for promotion and has not engaged in training or other professional development activities during the last three years. The auditor's performance assessments indicate consistent quality of work.
- B. An internal auditor discovered an internal financial fraud during the year, and the financial statements were adjusted to properly reflect the loss associated with the fraud. The auditor discussed the fraud with the external auditor during the external auditor's review of the working papers detailing the incident.
- C. An internal auditor, who has recently joined the organization, has accepted an assignment to audit the electronics manufacturing division. The auditor previously served as senior auditor for the external audit of that division and has audited many electronics companies during the past two years.
- D. An internal auditor has accepted an assignment to audit the warehousing function six months from now.
The auditor has no expertise in that area but has signed up for courses in warehousing that will be completed before the assignment begins.
Answer: A
Explanation:
Section: Volume A
NEW QUESTION # 160
Which of the following is the primary purpose of implementing a program whereby employees are rotated from other parts of the organization into the internal audit activity?
- A. It provides an opportunity for the recruitment of employees as permanent internal auditors
- B. It provides the internal audit activity with more resourcing options to meet the audit plan
- C. It offers internal auditors the opportunity to learn more about other work areas.
- D. It gives nonauditors a better understanding of the control environment.
Answer: C
NEW QUESTION # 161
Which of the following best describes the manual audit procedure known as vouching?
- A. Soliciting and obtaining written verification of the accuracy from an independent third party
- B. Testing the accuracy of the control by reperforming the task or process required
- C. Testing the completeness of information forward from a record to a subsequently prepared document
- D. Testing the validity of information by following it backward to a previously prepared record
Answer: C
NEW QUESTION # 162
According to the International Professional Practices Framework, which of the following is correct regarding conducting and reporting follow-up activities by the internal audit activity (IAA)?
- A. In situations where the identified risk may have a significant impact to the business and senior management has accepted the risk, it is not necessary for the CAE to inform the board of the decision.
- B. Management has stopped implementing several key recommendations citing a growing disagreement with their effectiveness. The auditor communicates the situation to the CAE who then escalates the matter to senior management.
- C. Due to management changes, the IAA is advised by management that no further work will be done. Further follow-up work is not required as management has accepted the related risk.
- D. A newly appointed auditor immediately proceeds to conduct follow-up testing based on previous work performed for the engagement and then reports the results to the chief audit executive (CAE).
Answer: B
NEW QUESTION # 163
During a consulting engagement, an internal auditor identifies new risks which will impact the scope and sufficiency of the engagement audit plan. According to the Standards, the internal auditor should:
- A. End the engagement, as the audit scope is no longer sufficient to meet the audit objective.
- B. Discuss the potential impact on the scope with the client.
- C. Modify the scope to incorporate the new risks and continue the engagement.
- D. Continue the engagement but highlight the impacts on the audit scope in the final report.
Answer: B
NEW QUESTION # 164
During a fraud interview, it was discovered that unquestioned authority enabled a vice president to steal funds from the organization. Which of the following best describes this condition?
- A. Rationalization.
- B. Pressure.
- C. Scheme.
- D. Opportunity.
Answer: D
Explanation:
Section: Volume E
NEW QUESTION # 165
According to IIA guidance, which of the following is the least appropriate role for the internal audit activity in the organization's risk management program?
- A. Conducting full investigations of suspected fraud.
- B. Assessing the risk of fraudulent activity in the organization.
- C. Providing ethics training sessions to organization staff.
- D. Monitoring the organization's whistle-blower hotline.
Answer: B
Explanation:
Section: Volume D
NEW QUESTION # 166
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 benefits deductions are accurate.
- B. Verify that recipients are valid employees.
- C. Verify that amounts are correct.
- D. Verify that payments are on time.
Answer: B
NEW QUESTION # 167
As a result of a recent discovery of false information on employment applications, an internal auditor has reviewed hiring procedures. Which of the following represents a weakness in the control system?
1. Applicants are not required to have their signed applications legally authenticated.
2. Applicants' educational information is not validated with the educational institution before employment is offered.
3. Information related to applicants' long-term work history is not validated before employment is offered.
- A. II and III only
- B. I, II, and III
- C. III only
- D. I and II only
Answer: A
NEW QUESTION # 168
Which of the following situations would justify the removal of a finding from the final audit report?
- A. Management has provided additional information that contradicts the findings.
- B. Management has already satisfactorily completed the recommended corrective action.
- C. Management believes that the finding is insignificant and unfairly included in the report.
- D. Management disagrees with the report findings and conclusions in their responses.
Answer: A
Explanation:
Section: Volume E
NEW QUESTION # 169
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IIA-CIA-Part2 certification exam, also known as the Practice of Internal Auditing, is offered by the Institute of Internal Auditors (IIA) to professionals seeking to enhance their knowledge and skills in the field of internal auditing. IIA-CIA-Part2 exam is designed to test the candidate's understanding of essential internal auditing practices and principles, including risk management, control frameworks, and governance.
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