Improve Your Knowledge with IIA-CIA-Part2 Exam Dumps

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March 18, 2023

Practicing with IIA-CIA-Part2 questions can help you identify areas where you need to improve your knowledge. By answering IIA-CIA-Part2 questions and reviewing your responses, you can identify gaps in your understanding and focus your study efforts on those areas. The IIA-CIA-Part2 exam has a strict time limit, and you need to manage your time effectively to answer all the questions. Practicing with IIA IIA-CIA-Part2 dumps questions can help you develop time management skills by simulating the exam's time constraints. You'll learn how to pace yourself, manage your time effectively, and ensure that you complete the IIA-CIA-Part2 exam within the allotted time. Test IIA IIA-CIA-Part2 exam free dumps below.

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1. The external auditor has identified a number of production process control deficiencies involving several departments. As a result, senior management has asked the internal audit activity to complete internal control training for all related staff.

According to IIA guidance, which of the following would be the most appropriate course of action for the chief audit executive to follow?

Refuse to accept the consulting engagement because it would be a violation of independence.

Collaborate with the external auditor to ensure the most efficient use of resources.

Accept the engagement but hire an external training specialist to provide the necessary expertise.

Accept the engagement even if the audit engagement staff was previously responsible for operational areas being trained.

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

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

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

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

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

3. A senior IT auditor is performing an audit of inventory valuation. The auditor misinterprets the sampling results.

Which of the following best describes this situation?

Sampling risk.

Control risk.

Nonsampling risk.

Residual risk.

4. According to IIA guidance, which of the following is most likely to become part of the engagement work program?

A. Information obtained from historic audits and memos.

B. Risk and control registers or matrices.

C. Resource deployment plans and sampling methodologies.

D. Prior findings and management responses.

5. An organization owns vehicles that are kept off-site by employees to pick up and deliver orders. An internal auditor selects a specific vehicle from the fixed asset register for testing.

Which of the following would best provide sufficient, indirect evidence for the auditor to confirm the existence of the vehicle?

Review logs of the vehicles assigned to employees for the delivery of goods during the engagement period.

Visit the home address of the specific employee to see the selected vehicle.

Compare the registered details of the vehicle in the fixed asset register to a date-stamped photograph of the vehicle.

Seek independent confirmation of the vehicle's details from one of the delivery employees.

6. During an assurance engagement, an internal auditor discovered that a sales manager approved numerous sales contracts for values exceeding his authorization limit. The auditor reported the finding to the audit supervisor, noting that the sales manager had additional new contracts under negotiation.

According to IIA guidance, which of the following would be the most appropriate next step?

The audit supervisor should include the new contracts in the finding for the final audit report.

The audit supervisor should communicate the finding to the supervisor of the sales manager through an interim report.

The audit supervisor should remind the sales manager of his authority limit for the contracts under negotiation.

The auditor should not reference the new contracts, because they are not yet signed and therefore cannot be included in the final report.

7. Senior management is challenging regulatory fines that were assessed to the organization due to questionable business practices. Their actions and the fines could have an adverse effect on the organization's ability to continue business.

How would the chief audit executive respond?

Assume responsibility for quantifying and minimizing the residual risks to the organization.

Assess the level of financial risks that may affect the organization's stability.

Inform the regulatory agency about senior management's action and seek guidance.

Proceed with a consulting engagement to benchmark similar organizations' business practices in the region.

8. Which of the following statements is true regarding engagement planning?

The scope of the engagement should be planned according to the internal audit activity’s budget and then aligned to the risk universe.

The audit engagement objectives should be based on operational management's view of risk objectives.

The planning phase of the engagement should be completed and approved before the fieldwork of the engagement begins.

The main purpose of the engagement work program is to determine the nature and timing of procedures required to gather audit evidence.

9. An internal auditor selects a sample of paid invoices and matches them to receiving reports.

What is the most likely purpose for this procedure?

To ensure all customer shipments are billed appropriately.

To ensure invoices are only paid for goods received.

To ensure all liabilities have been satisfied.

To ensure invoices are only paid for goods ordered.

10. If there is a significant error or omission in the final audit report that was communicated to management, which of the following is the key action for the internal audit activity?

Communicate the corrected information to the manager of the audited department.

There should be a follow-up audit to address the error or omission.

The auditor should update the scope of the audit to include the omission.

The corrected communication should be redistributed to the original recipients.

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11. In the following risk control map risks have been categorized based on the level of significance and the associated level of control.

Which of the following statements is true regarding Risk C?

The level of control is appropriate given the level of risk

The level of control is excessive given the level of risk

The level of control is inadequate given the level of risk

There is not enough of information to determine whether the controls are appropriate or not

12. An organization recently acquired a subsidiary in a new industry, and management asked the chief audit executive (CAE) to perform a comprehensive audit of the subsidiary prior to recommencing operations. The CAE is unsure her team has the necessary skills and knowledge to accept the engagement According to IIAguidance, which of the following responses by the CAE would be most appropriate?

The CAE should accept the engagement and ensure that an explanation of the expertise limitations is included in the final audit report.

The CAE should ask management to hire an external expert who is familiar with the industry to perform an independent audit for management

The CAE should accept the engagement and hire an external expert to assist the audit team with the audit of the subsidiary

The CAE should recommend postponing the engagement until the internal audit team is able to develop sufficient knowledge of the new industry

13. At a construction company, an internal auditor is planning an audit of the company's process for designing and building grid connections.

The process involves customers making payments m three parts

• The first payment of 10% after approval of the customer s application

• The second payment of 70% prior to construction

• The third payment of 20% after construction is complete

Which of the following key controls should the auditor test to ensure that the company is not taking any unwanted credit risks?

Controls that ensure that grid connection design is finalized before construction is approved to begin

Controls that ensure construction orders are initiated after the second invoice is paid

Controls that ensure all three invoices are calculated correctly according to the total project cost

Controls that ensure that applications are verified for approval prior to initiating design and construction

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

Inventory comprised of the same items stored in different warehouses

Batches of materials that must be confirmed as meeting quality standards

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

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

15. Internal benchmarking

1.2 and 3

1.2. and 4.

1.3. and 4.

2. 3. and 4.

16. Which of the following is an example of a properly supervised engagement?

Auditors are asked to keep a daily record of their activity for review by the auditor in charge following the engagement.

The senior internal auditor requires each auditor to review and initial colleagues' workpapers for completeness and format.

A new internal auditor is accompanied by an experienced auditor during a highly sensitive fraud investigation.

The auditor in charge provides reasonable assurance that engagement objectives were met.

17. An organization's board would like to establish a formal risk management function and has asked the chief audit executive (CAE) to be involved in the process.

According to IIA guidance, which of the following roles should the CAE not undertake?

Manage and coordinate risk management processes.

Audit risk management processes.

Become involved in risk oversight committees, monitoring activities, and status reporting.

Accept management's responsibility for risk management without board approval.

18. Which of the following is true regarding the monitoring of internal audit activities?

The form and content of monitoring policies could vary by industry

The board of directors is responsible for the establishment of monitoring polities

Both large and small audit departments must have written policies on monitoring.

The chief audit executive must develop all monitoring policies related to the activity

19. Where should internal auditor focus their attention when identify and assessing key risks during the planning stage of an assurance engagement?

Sampling risk.

Audit risk.

Residual risk.

Inherent risk

20. An internal auditor wants to identity potential ghost employees in the organization's payroll system.

The auditor extracts the following data

- Human resources data with employees' names addresses employment conditions and identification codes

- Payroll data

- Logs from entrance systems

With this data, which of the following types of ghost employees will the auditor be able to identify?

Employees who are being paid more than then approved wages

Employees who get paid although their employment has expired

Employees who are related to one of the subcontractors

Employees who are physically present at the workplace but who do not perform the specified job duties

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21. While planning an audit engagement of a procurement card activity.

which of the following actions should an internal auditor take to identify relevant risks and controls?

Compare card transaction types against procurement card policy guidelines.

Develop the scope and objectives of the engagement

Determine how many cardholders exceeded their daily limit.

Meet with the procurement card program administrator

22. Which informal ion- gathering method would be most efficient for an internal auditor to determine whether specified control procedures are in place?

Interviews

Observations

Reperformance

Internal control questionnaires

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

The best source tor detailed process information is senior management

Audit objectives should be general and do not change.

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

Internal auditors should prepare a dented audit program for testing controls

24. Which of the following factors would be the most critical in determining which engagements should be included in the annual internal audit plan?

Whether an audit is explicitly required by the internal audit charter

The extent to which the work to be performed is an assurance or consulting engagement

The organization's annual risk management strategy

Risks that are identified by operations staff or senior management

25. Which of the following statements about assurance maps is correct?

An assurance map is used by the chief audit executive to coordinate assurance activities with other internal and external assurance providers

An assurance map is a picture of all assurance engagements performed by the internal audit activity across the organization

An assurance map is used by the engagement supervisor to coordinate the roles of various internal audit team members assigned to assurance engagements

An assurance map lists the procedures and testing activities performed by an internal audit team during an assurance engagement

26. A manufacturer is under contract to produce and deliver a number of aircraft to a major airline. As part of the contract, the manufacturer is also providing training to the airline's pilots. At the time of the audit, the delivery of the aircraft had fallen substantially behind schedule while the training had already been completed.

If half of the aircraft under contract have been delivered, which of the following should the internal auditor expect to be accounted for in the general ledger?

Training costs allocated to the number of aircraft delivered, and the cost of actual production hours completed to date.

All completed training costs, and the cost of actual production hours completed to date.

Training costs allocated to the number of aircraft delivered, and 50% of contracted production costs.

All completed training costs, and 50% of the contracted production costs.

27. Which of the following is the most appropriate approach for the internal audit activity to follow up on management action plans?

Create a tracking system for follow up

Ensure that follow-up activities are performed at least weekly.

Delegate follow-up activities to qualified administrative staff within the business unit

Ensure that follow-up activities are performed by the most senior auditor on staff

28. An internal auditor develops an engagement observation related to an organization's accumulation of large travel advances. The auditor observes that the organization's procedures do not require justification for travel advances greater than a specific amount.

Which of the following best describes the organization's procedures?

A criterion of the organization's accumulation of large travel advances

A condition of the organization's accumulation of large travel advances

A consequence of the organization's accumulation of large travel advances

A cause of the organization's accumulation of large travel advances

29. A chief audit executive (CAE) determined that management chose to accept a high-level risk that may be unacceptable lo the organization.

Which is the best course of action for the CAE to Follow?

Include using in a subsequent audit to determine if the risks are still present

Discuss the matter with senior management and it not reserved with the board

Require that management implement controls to mitigate lie risks

Report the risks to the process owners so that they can modify their process

30. An internal audit manager is planning a contract compliance audit.

Which of the following should be done prior to developing the audit work program?

Select a sample of invoices for substantive testing

Review the contract for evidence of authorization

Document underlying reasons for noncompliance

Assess the inherent risk of paying duplicate invoices

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31. 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?

Solicit the services of a specialist information systems auditor

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

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

Consider the detection risk of noncompliance with the laws

32. In a health care organization the internal audit activity provides overall assurance on governance, risk and control. The chief audit executive advises and influences senior management, and the audit strategy leverages the organization's management of risk According to HA guidance which of the following stages of internal audit maturity best describes this organization?

Infrastructure.

Emerging.

Managed.

Initial.

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

A risk where likelihood and impact are high

A risk where inherent risk exceeds its residual risk

A risk where inherent risk exceeds the tolerance level

A risk where residual risk exceeds the tolerance level

34. An internal auditor is using attributes sampling to test internal controls. Under which of the following circumstances would the auditor increase the original sample size to estimate error occurrence at a

given precision and confidence level?

A. The sample rate of occurrence plus the precision exceeds the acceptable error rate.

B. The sample rate of occurrence is less than the acceptable error rate.

C. The acceptable rate of occurrence less the precision exceeds the sample rate of occurrence.

D. The sample rate of occurrence plus the precision equals the acceptable error rate.

35. If observed during fieldwork by an internal auditor, which of the following activities is least important to communicate formally to the chief audit executive?

Acts that may endanger the health or safety of individuals.

Acts that favor one party to the detriment of another.

Acts that damage or have an adverse effect on the environment.

Acts that conceal inappropriate activities in the organization.

36. Acceding to IIA guidance, which of the following statements is true regarding the risk assessment process performed by the internal audit activity?

The assessment of high-level risks is typically a linear process.

Management should create the preliminary risk matrix

The analysis should begin with ne identification of objectives

Likelihood should receive greater consideration than impact

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

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

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

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

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

38. Which of the following is the primary purpose of financial statement audit engagements?

To assess the efficiency and effectiveness of the accounting department.

To evaluate organizational and departmental structures, including assessments of process flows related to financial matters.

To provide a review of routine financial reports, including analyses of selected accounts for compliance with generally accepted accounting principles.

To provide an analysis of business process controls in the accounting department, including tests of compliance with internal policies and procedures.

39. Which of the following statements is true regarding engagement planning?

The engagement objectives are the boundaries for the engagement, which outline what will be included in the review

The risk-based objectives of the engagement can be determined once the scope of the engagement has been formed

For a consulting engagement, planning typically occurs after the engagement objectives and scope have already been determined

For an assurance engagement, once the scope is established and testing has begun, the scope cannot be modified.

40. While conducting an information security audit, an internal auditor learns that the existing disaster recovery plan is four years old and untested. The auditor also learns that in the four years since the recovery plan was implemented, the information systems have undergone extensive changes.

Which of the following actions is most appropriate for the auditor to take?

A. Inform management and request that the plan be tested immediately.

B. Update the recovery plan for management, as part of the review.

C. Evaluate the recovery plan and report weaknesses to management.

D. Recommend that management and users update and test the recovery plan.

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41. The head of customer service asked the chief audit executive (CAE) whether eternal auditors could assist her staff with conducting a risk self-assessment in the customer service department. The CAE promised to meet with customer service managers analyze relevant business processes, and come up with a proposal.

Who is most likely to be the final approver of the engagement objectives and scope?

Senior management of the organization

The chief audit executive

The head of customer service

The board of directors

42. The following is a list of major findings in the executive summary report for an audit of the contract management process

- Noncompliance with contract provisions requiring vendors to obtain insurance policies with indemnity value of not less than $1 million

- Compliance with contract obligations and deliverables is not monitored

- No contract agreement with five vendors providing core services

Which of the following is an appropriate conclusion that can be drawn from these findings?

These are weaknesses resulting from a lack of a documented contracting policy

Substandard service delivery by vendors may not be detected

Management should expedite actions to rectify the observations identified

The internal controls guiding contract management are not operating effectively

43. According to IIA guidance, which of the following should be a primary objective for an internal auditor who is conducting an exit conference?

Improve relations with the engagement clients.

Present the final engagement communication.

Identify concerns for future audit engagements.

Ensure the accuracy of engagement conclusions.

44. What is the best course of action for a chief audit executive if an internal auditor identifies in the early stage of an audit that some employees have inappropriate access to a key system?

Contact the audit committee chair to discuss the finding

Obtain verbal assurance from management that the inappropriate access will be removed

Issue an interim audit report so that management can implement action plans

Ask the auditor to create a ticket with the IT help desk requesting to revoke the inappropriate access

45. In which of the following ways can the internal audit activity new engagement opportunities?

By defining activities by business processes.

By looking external factors such as product complaints.

By looking at activities by businesses cost centers.

By defining activities by the organization chart.

46. As part of internal audit's assistance with an annual external audit, the internal auditors are required to do a preliminary analytical review of an bank account balances. This involves verifying the current year end balances as web as comparing the current year end balances with previous year end balances to highlight significant changes.

Which of the following is the most reliable source for verification of the current year end bank balances?

Bank confirmations

Internal bonk statements

Bank reconciliations as of the end of the year

Bank account general ledger balancer as of the end of the year

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

Surveys

Management produced analysis 0

Facilitated team workshops

Weighted risk factors

48. Which of the following statement is consistent with IIA guidance the use of mentoring for internal auditors?

The member and the internal auditor should opt for informal meetings even if it means that no formal documentation will be created.

The mentor relationship is usually not suitable for internal audit staff, as it does not leas to professional development.

The value of mentoring is derived primarily from the personal relationship between the two parties involved, and the mentor’s level of relevant experience should not be a key factor.

The mentor should be the internal auditor’s supervisor to ensure that the auditor performance is assessed in a relevant and meaningful context.

49. The internal audit activity (IAA) wants to measure its performance related to the quality of audit recommendations.

Which of the following client survey questions would best help the IAA meet this objective?

Were audit findings relevant and useful to management?

Does the audit report format present issues clearly and concisely?

Does the IAA work with a high degree of professionalism and objectivity?

Were the findings reported in a timely manner?

50. Upon completing a follow-up audit engagement, the chief audit executive (CAE) noted that management has not implemented any mitigation measures to address the high risks that were reported in the initial audit report.

What initial step must the CAE take to address this situation?

Communicate the issue to senior management.

Discuss the issue with members of management responsible for the risk area.

Report the situation to the external auditors.

Escalate the issue to the board.

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51. Which of the following is a true statement regarding the use of flowcharts as an audit tool?

Flowcharts are typically not well suited to support information provided by a risk and control matrix.

Flowcharts are preferred to narratives, as they can provide much greater detail on the design and operation of a process.

Flowcharts are best applied to linear process flows but cannot address all risks related to the process.

Flowcharts describe process steps but cannot provide the level of detail needed to adequately assess the design of the process.

52. An organization is experiencing a significant risk that threatens its financial well-being Senior management requested that the chief audit executive (CAE) meet with them to discuss the risk.

Which of the following would best describe the CAE's responsibility at the meeting?

Inform senior management of the appropriate actions they should take to control the risk

Recommend that the internal audit activity provide consulting services to help minimize the risk

Assume the responsibility of resolving the significant risk that will affect the organization

Determine whether senior management accepted risk that may be deemed unacceptable for the organization

53. Which of the following is the most appropriate objective for establishing a professional development plan for the internal audit activity?

A. A plan that focuses on furthering the independence of the internal audit activity.

B. A plan that ensures internal auditors collectively possess expertise in various fields to avoid outsourcing.

C. A plan based on individual preferences and proposals, which helps internal auditors achieve greater success.

D. A plan that focuses on filling gaps in the current skills needed to complete audit objectives.

54. According to IIA guidance, which of the following is true when the internal audit activity is asked to investigate potential ethics violations in a foreign subsidiary?

Communication of any internal ethics violations to external parties may occur with appropriate safeguards.

Cultural impacts are less critical where the organization practices uniform polices around the globe.

Cross-cultural differences should always be handled by the staff of the same cultural background.

Local law enforcement should be involved as they are more familiar with the applicable local laws.

55. An internal auditor is asked to review a recently completed renovation to a retail outlet.

Which of the following would provide the most reliable evidence that the completed work conformed to the plan?

An interview with the employee who performed the work

An analysis of purchasing and receiving documentation

Existence of a signed completion document accepting the work

A physical inspection of the retail outlet.

56. Negotiating a settlement of an employee claim for personal damages.

1 and 2

1 and 4

2 and 3

3 and 4

57. Third-party opinion.

1 and 3

1 and 4

2 and 3

2 and 4

58. An internal auditor discovered that sales contracts with business clients were not stored in the electronic document management database instead they were scanned and saved in a nonsystematic manner to server folders.

Which of the following would be an appropriate consequence for the internal auditor to include in the documented observation?

The document management policy requires business client data to be stored in a specific management database

Sales contracts were stored improperly because the office manager was not trained to use the electronic database and prefers to avoid it

if the organization becomes subject to litigation the agreed pricing terms and conditions of the contracts may be difficult to prove

All staff should be appropriately trained and required to follow the organization's established policies and procedures pertaining to document management

59. Below is a flowchart detailing an organization's bank reconciliation process.

Which of the following conclusions can be drawn from the flowchart?

A. There is a conflict in the segregation of duties between preparing bank reconciliations and posting payments to the accounting books.

B. There is an appropriate segregation of duties in the treasury department during the bank reconciliation process.

C. There is a large workload for the treasury accountant during the bank reconciliation process.

D. Bank statements should be obtained at a higher level, such as through the treasury supervisor.

60. Which of the following sampling techniques is typically used when an internal auditor wants to test a large sample for fraud?

Stratified sampling

Haphazard sampling

Discovery sampling

Probability-proportional-to-size sampling

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61. Which of the following sources of testimonial evidence would be considered the most reliable regarding whether a process is effectively performed according to its design?

The person responsible for performing the task

Two or more people that work in the area

The supervisor in charge of the process

The manager that wrote the steps to be followed

62. An IT auditor is reviewing the access controls in an organization's accounting application. The auditor intends to deploy a tool that can help test the logical controls embedded in the system to ensure employee access is granted according to need.

Which of the following would help achieve this objective?

Utility software

Generalized audit software

Audit expert systems.

integrated test facility

63. Upon the completion of an audit engagement an audit manager performs a review of a staff auditor's workpapers.

Which of the following actions by the manager is the most appropriate this review''

Communicate the workpaper review results to management of fie area under review to validate the final report

Update the final report in the file with any necessary corrections based on the workpaper review.

Discuss the workpaper review results with the staff auditor where appropriate as a leaning opportunity

Add the manager's review notes to the final documentation following the review

64. Which of the following statements is true regarding internal controls?

For assurance engagements internal auditors should plan to assess the effectiveness of all entity-level controls

Poorly designed or deficient entity-level controls can prevent well-designed process controls from working as intended.

During engagement planning, internal auditors should not discuss the identified key risks and controls with management of the area under review to prevent tipping off probable audit lasts

Reviewing process maps and flowcharts is an appropriate method for the internal a auditor to identify all key risks and controls during engagement planning

65. Which of the following is a significant governance issue that should be reported by the chief audit executive to the board?

There is no risk management and control process and risk management is solely tie responsibility of operational managers

The organisation’s code of conduct is distributed to employees each year however employees are not required to attest that they will operate In compliance with the code.

Reconciliation of planned board meeting agendas to meeting minutes finds that one meeting was canceled, and the agenda topics were covered at the following meeting.

The review of the five-year strategic plan shows that the details of the plan have not been dearly communicated to employees throughout the organization

66. Which type of engagement would be the most appropriate to assess the maturity and rigor of the organization wide risk management process of a target entity that management is considering acquiring?

A due diligence engagement.

An operational audit engagement.

A feasibility study engagement.

A risk and control self-assessment engagement.

67. Which of the following is the next step in understanding a business process once an internal auditor has identified the process?

Determine process outputs.

Determine process inputs.

Determine process activities.

Determine process goals.

68. When creating the internal audit plan, the chief audit executive should prioritize engagements based primarily on which of the following?

The last available risk assessment.

Requests from senior management and the board.

The longest interval since the last examination of each audit universe item.

The auditable areas required by regulatory agencies.

69. An organization does not have a formal risk management function.

According to the Standards, which of the following are conditions where the internal audit activity may provide risk management consulting?

There is a clear strategy and timeline to migrate risk management responsibility back to management.

The internal audit activity has the final approval on any risk management decisions.

The internal audit activity gives objective assurance on all parts of the risk management framework for which it is responsible.

The nature of services provided to the organization is documented in the internal audit charter.

1 and 4 only.

2 and 4 only.

1 and 3 only.

2 and 3 only.

70. Which phase of an audit engagement is typically the most effective time for an internal auditor to develop a risk and control matrix?

When preparing to recap audit test results.

At sample selection, to determine sampling methodology.

At the start of fieldwork, as part of developing the annual audit plan.

At planning, to assist in developing the engagement work program.

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71. According to IIA guidance which of the following statements is true regarding the annual audit plan?

The annual audit plan should only be adjusted in response to problems with resourcing, scope, and data availability.

The chief audit executive (CAE) may incorporate risk information, including risk appetite levels from management for the audit plan at her discretion.

In an immature risk management environment it is preferable for the CAE to rely solely on her judgment regarding risk identification and assessment to develop the audit plan.

The CAE may make adjustments to the annual audit plan as needed without senior management or board approval.

72. An organization's healthcare insurance costs have been rising approximately 10 percent per year for several years.

Which of the following analytical review procedures would best evaluate the reasonableness of the increase in healthcare costs?

Develop a comparison of the costs incurred with similar costs incurred by other organizations.

Obtain the government index of healthcare costs for the comparable period of time and compare the rate of increase with that of the cost per employee incurred by the organization.

Obtain a bid from another healthcare administrator to provide the same administrative services as the current healthcare administrator.

Review all claims and compare with appropriate procedures to ensure that overpayments have not occurred.

73. Which of the following is least likely to help ensure that risk is considered in a work program?

Risks are discussed with audit client.

All available information from the risk-based plan is used.

Client efforts to affect risk management are considered.

Prior risk assessments are considered.

74. Some lime after the final audit report was issued, the engagement supervisor teamed that several internal control deficiencies were not remedied, despite management's previous agreement to remedy them According to IIA guidance, which of the following is the most appropriate response'5

The engagement supervisor must notify the chief audit executive (CAE) that the deficiencies have not been rectified

The engagement supervisor should rely on professional judgment as to whether the CAE should be informed, or the management action plan should be adjusted

The engagement supervisor should rely on his negotiation skills and issue an ultimatum to management to remedy the control deficiencies

Ensure that these deficiencies are captured in the documentation as high-priority areas to be reviewed during the next audit.

75. 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?

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

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

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

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

76. During a consulting engagement an internal auditor wants to determine whether all principal stakeholders are involved in a project.

Which tool should the auditor use?

RACI (responsible, accountable, consult and inform) chart

Flowchart

SWOT {strengths. weaknesses opportunities, and threats) analysis

Workflow analysis

77. Which of the followings statements describes a best practice regarding assurance engagement communication activities?

All assurance engagement observations should be communicated to the audit committee.

All assurance engagement observations should be included in the main section of the engagement communication.

During the "communicate" phase of an assurance engagement, it is best to define the methods and timing of engagement communications.

A detailed escalation process should be developed during the planning stage of an assurance engagement.

78. Internal auditors map a process by documenting the steps in the process, which provides a framework for understanding.

Which of the following is a reason to use narrative memoranda?

To create a detailed risk assessment.

To identify individuals who perform key roles.

To explain a simple process.

To document which outputs support other activities.

79. The audit manager asked the internal auditor to perform additional testing because several irregularities were found in the financial information.

Which of the following would be the most appropriate analytical review for the auditor to perform?

Compare the firm's financial performance with organizations in the same industry

Interview all managers involved in preparing the financial statements

Perform a bank reconciliation to confirm the cash balance in the financial statements.

Trace each financial transaction to the original supporting document

80. The chief risk officer (CRO) of a large manufacturing organization decided to facilitate a workshop for process managers and staff to identify opportunities for improving productivity and reducing defects.

Which of the following is the most likely reason the CRO chose the workshop approach?

It minimizes the amount of time spent and cost incurred to gather the necessary information.

Responses can be confidential, thus encouraging participants to be candid expressing their concerns.

Workshops do not require extensive facilitation skills and are therefore ideal for nonauditors.

Workshop participants have an opportunity to learn while contributing ideas toward the objectives.

Page 9 of 16

81. An audit reveals that a manager's spouse is receiving paychecks, but is not employed by the organization. According to IIA guidance, which of the following actions should the internal auditor take?

Contact the external auditor and provide all relevant documentation.

Report the finding to senior management in a timely manner, following the normal chain of command.

Meet with the local manager to obtain more information on the finding before taking further action.

Bypass the normal chain of command and contact the board directly to report the finding.

82. According to IIA guidance, which of the following factors should the auditor in charge consider when determining the resource requirements for an audit engagement?

The number, experience, and availability of audit staff as well as the nature, complexity, and time constraints of the engagement.

The appropriateness and sufficiency of resources and the ability to coordinate with external auditors.

The number, proficiency, experience, and availability of audit staff as well as the ability to coordinate with external auditors.

The appropriateness and sufficiency of resources as well as the nature, complexity, and time constraints of the engagement.

83. An organization s inventory is stored m multiple warehouses. During an inventory audit which of the following activities would most benefit from the use of computerized audit tools?

Verifying the existence of inventory items in each warehouse

Assigning the tolerable deviation rate to determine the sample size

Valuating the obsolete Inventory from all the warehouse locations

Confirming that the purchased items are recorded In the correct period

84. When reviewing workpapers, engagement supervisors may ask for additional evidence or clarification via review notes.

According to IIA guidance, which of the following statements is true regarding the engagement supervisor’s review notes?

The review notes may be cleared from the final documentation once the engagement supervisor’s concerns have been addressed.

Management of the area under review must address the engagement supervisor's review notes before the audit report can be finalized.

The chief audit executive must initial or sign the engagement supervisor’s review notes to provide evidence of appropriate engagement supervision.

Review notes provide documented proof that the engagement is supervised properly and must be retained for the quality assurance and improvement program.

85. Prior to performing testing an internal auditor has determined that a primary process control failed due to design weakness.

Which of the following actions should the auditor perform next?

Determine whether there are any compensating controls in place to reduce the nsk to an acceptable level, and discuss this matter with management of the business area to determine which corrective action is needed

Test the control anyway to determine the likelihood that the control was not performed property, and discuss this matter with management of the business area to determine which corrective action is needed

Conclude that the process control environment is weak, issue a finding on this conclusion and report this finding to management of the business area

Confer with a second internal auditor to determine whether the control failure is legitimate issue a finding on this conclusion and report this finding to management of the business area

86. According to IIA guidance, which of the following typically serves as the basis for an engagement work program?

Past audit findings.

Scope and audit objectives.

Techniques and resources.

Stakeholders' expectations.

87. According to IIA guidance which of the following best describes reliable information?

Reliable information is factual adequate, and convincing so that a prudent informed person would reach the same conclusions as the internal auditor

Reliable information is the best attainable information through the use of appropriate engagement techniques

Reliable information supports engagement observations and recommendations and is consistent with the objectives for the engagement

Reliable information helps the organization and the internal audit activity meet its goals

88. According to IIA guidance, which of the following is true regarding the exit conference for an internal audit engagement?

A primary purpose of the exit conference is to provide for the timely communication of observations that call for immediate management action.

Both the chief audit executive and the chief executive over the activity or function reviewed must attend the exit conference to validate the findings.

The exit conference provides only anticipated results for inclusion in the final audit communication.

During the exit conference, the performance of the internal auditors who executed the engagement is reviewed.

89. The AIC should finalize the scope of the engagement before communicating with HR management.

1 and 3

1 and 4

2 and 3

2 and 4

90. While reviewing the organization’s financial year-end processes, an internal auditor discovered an erroneous journal entry. If the error is not addressed, it will result in a material misstatement of the financial records. The internal auditor needs an additional four weeks to complete the audit engagement.

How should the auditor communicate this finding?

The auditor should issue an interim report to management prior to completion of the audit and issuance of the final report.

The auditor should include this item in the final audit report, marked with an asterisk, indicating that it is a high-risk item.

The auditor should discuss the finding with the appropriate accounting staff who can make the correction immediately, and if corrected before the engagement is concluded, the finding would not need to be included in the audit report.

The auditor is obligated to bypass management and immediately report the error directly to regulatory authorities.

Page 10 of 16

91. The internal audit activity is planning an assurance engagement for a foreign subsidiary.

According to IIA guidance, which of the following would be included in the preliminary communication to management of the area under review?

The scope of the engagement, the estimated time frame, and the names of the auditors.

The estimated time frame, the names of the auditors, and the resources and travel budget.

The names of the auditors, the resources and travel budget, and the scope of the engagement.

The resources and travel budget, the scope of the engagement, and the estimated time frame.

92. According to IIA guidance, which of the following procedures would be least effective in managing the risk of payroll fraud?

The employee’s name listed on organization’s payroll is compared to the personnel records.

Payroll time sheets are reviewed and approved by the timekeeper before processing.

Employee access to the payroll database is deactivated immediately upon termination.

Changes to payroll are validated by the personnel department before being processed.

93. A healthcare organization's chief audit executive (CAE) noted that the organization's IT team relies heavily on a vendor. Therefore an IT vendor assessment review was added to the annual audit plan. During the review, the audit team discovered that the vendor had not been performing proper monitoring to ensure that the subcontractors it hired comply with the organization requirements. The organization's chief information officer (ClO) does not agree with the audit team's recommendation for the IT team to monitor the compliance level of vendor subcontractors.

How should the audit team proceed to resolve this situation?

Write a risk acceptance memo for the CIO to sign acknowledging the observation and indicating a willingness to accept the risk.

Provide an example of the attestation form that vendors must use. Then, recommend that the IT team require vendors to submit the attestation form on a regular basis.

Escalate the issue to the audit committee, as the CIO is unwilling to implement the recommended action plan.

Escalate the issue to the CAE to assess whether the ClO's reasoning is acceptable.

94. Which of the following is most likely to be judged as a significant residual risk that would exceed the organization's acceptable risk level?

Any risk involving organizational expansion into a new geographical area with an unstable political environment.

Any risk involving investments into bitcoin and suspicious derivatives

Any risk that can cause material or financial loss

Any risk that could cause injuries or pollute the environment

95. Which of the following parties is accountable for ensuring adequate support for conclusions and opinions readied by the internal audit activity while relying on external auditors' work?

Board of directors

External auditors

Chief audit executive

Senior management

96. An internal auditor discovered a control weakness that needs to be communicated to management.

Which of the following is the best method for first communicating the weakness?

A. Draft report, to be reviewed by management just prior to final report issuance.

B. Preliminary observation document, discussed during the engagement.

C. Final report, after review by audit management.

D. Verbal communication during the engagement, followed by the final report issuance.

97. According to IIA guidance, which of the following reflects a characteristic of sufficient and reliable information?

The establishment of an audit approach and documentation system

The standardization of workpaper terminology and notations

The ability to reach consistent audit conclusions regardless of who performs the audit

The application of documentation standards m an appropriate and consistent manner

98. Which method of examining entity-level controls involves gathering information from work groups that represent different levels in an organization?

Questionnaires.

Surveys.

Structured interviews

Facilitated team workshops

99. An internal auditor is conducting a financial audit.

Which of the following audit procedures is most appropriate when existing internal controls are weak?

Analytical procedures.

Detail testing.

Test of design.

Test of control.

100. Which of the following methodologies consists of the internal auditor holding individual meetings with different people, asking them the same questions, and aggregating the results?

Facilitated workshops.

Surveys.

Structured interviews.

Elicitation.

Page 11 of 16

101. While reviewing warehouse inventory records, an internal auditor noticed that the warehouse has a surprisingly high number of products in storage. Over the past three years, the auditor had visited this particular warehouse numerous times for previous engagements and remembered that the warehouse was rather small. The auditor then decided to compare the square footage of the warehouse to the recorded number of products in storage.

The auditor’s action is an example of which of the following?

Performing a reasonableness test.

Conducting a fraud investigation.

Conducting trend analysis.

Operating with impaired objectivity.

102. 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?

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.

103. Which of the following information is most appropriate for the chief audit executive to share when coordinating audit plans with other internal and external assurance providers?

Objectives scope and timing at a high level to support coordination while adhering to confidentiality requirements

The area and timing of the audit engagement to ensure confidentially and avoid conflict of interest.

All plan information, including risk assessments, planned tests and past results to maximize the opportunity for coordination with internal and external providers.

No information should be shared with internal and external provider as it could introduce bias into the engagement results.

104. Provide the auditor with instructions and directions to complete the audit.

1, 2, and 3

1, 2, and 4

1, 3, and 4

2, 3, and 4

105. The audit plan is aligned with the organization's goals.

1 and 2 only

3 and 4 only

1, 2, and 4

1, 3, and 4

106. An internal auditor plans to conduct a walk-through to evaluate the control design of a process.

Which of the following techniques is the auditor most likely to use?

Observation and inspection.

Inquiry and observation.

Inspection and reperformance.

Inquiry and reperformance.

107. Is the documentation easily accessible to an persons who need in to perform their job?

Which of the following is a drawback of testing methods like this?

They ore kitted as they do not allow the auditor to test many controls.

They do not highlight control gaps

They are not useful for identifying areas on which the auditor should locus.

They are limited as there is a risk that management may not answer fairly.

108. During the preliminary survey of the procurement department, an internal auditor noted a major control weakness in the organization's ordering and receiving process.

According to IIA guidance, which of the following is the most appropriate action the internal auditor should take?

Issue a final report on the control weakness to senior management.

Bring the control weakness to the attention of the process owner for resolution.

Note the control weakness for discussion during the exit meeting.

Carry out an investigation of the control weakness for disciplinary action.

109. Which statistical sampling approach would an internal auditor typically utilize if she wishes to test for fraud and the expected deviation rate is very low?

Stratified sampling

Attribute sampling

Discovery sampling

Haphazard sampling

110. To effectively communicate the acceptance of risk in an organization a chief audit executive must first consider which of the following?

The organization's view on risk tolerance

The organization's principal risk events.

The organization's risk response strategies

The organization's major control activities

Page 12 of 16

111. What is the purpose of an internal control questionnaire?

To gather information from a sample of people who are geographically dispersed

To assess risks that could prevent an audited area from achieving its objectives.

To evaluate tie level of compliance of remote offices with centrally designed procedures

To perform testing of controls more frequently

112. A senior internal auditor is hired within the internal audit activity for a period of two years before advancing to an operations manager role within the business operations team.

When staffing arrangement is being used in this scenario?

Comer of competence

Career model

Rotational model

Cosourcing agreement

113. Which of the following is an appropriate activity when supervising engagements?

During engagement planning, the audit work program should be discussed between auditors and the engagement supervisor with the supervisor approving the work program.

During fieldwork, scope changes made to the work program are at the auditor's discretion and should be supported adequately in the workpapers.

Engagement supervision is most critical to the fieldwork and reporting phases of the audit, as this is where the majority of the work takes place.

A degree of high supervision to no supervision may be provided to an auditor depending on his level of competence and the complexity of the engagement.

114. An internal auditor is planning a consuming engagement and the objective is to identify opportunities to improve the efficiency of the organization’s procurement process. The auditor is preparing to conduct a preliminary survey of the area.

Which of the following approaches would be most useful to obtain relevant information to support the engagement objective?

Complete a transaction walkthrough that focuses on the design and operation of financial reporting controls

Conduct interviews with senior management to obtain their input and insights regarding operational controls.

Perform a comprehensive review of the organization s existing policies and standard operating procedures.

Review the procurement process map with employees who carry out key activities to obtain their input and insights.

115. According to IIA guidance, how should an internal auditor apply any relevant information obtained from an internal consulting engagement during a related internal audit engagement?

Document any facts obtained and include them as part of the audit engagement workpapers.

Rely upon the information to draw conclusions about the effectiveness of controls.

Use the knowledge obtained to evaluate the effectiveness of internal control processes.

Objectivity requires that this information should not be used in any part of the audit engagement.

116. New environmental regulations require the board to certify that the organization's reported pollutant emissions data is accurate. The chief audit executive (CAE) is planning an audit to provide assurance over the organization's compliance with the environmental regulations.

Which of the following groups or individuals is most important for the CAE to consult to determine the scope of the audit?

The audit committee of the board.

The environmental, health, and safety manager.

The organization's external environmental lawyers.

The organization's insurance department.

117. According to IIA guidance, which of the following statements is true regarding engagement planning?

For both assurance and consulting engagements, planning typically occurs after the engagement objectives and scope have already been determined.

The expectations and objectives of an assurance engagement are usually determined by, or in conjunction with, the engagement client.

Internal auditors may not need to complete a preliminary risk assessment for a consulting engagement as they would when planning an assurance engagement.

For both consulting and assurance engagements, internal auditors usually form the engagement objectives prior to completing the preliminary risk assessment.

118. Which of the following actives is an internal auditor most likely to perform when establishing the objectives of an assurance engagement?

Discuss the internal audit risk assessment including applicable risks and objectives with internal audit management

Perform a walk-through of the process under review to determine whether control wore operating, effectively

Identify when controls will be tested and the sampling method to be used based on control risk

Meet with operational management to team about any areas of concern and to agree on the engagement objectives

119. Which of the following is a detective control for managing the risk of fraud?

Awareness of prior incidents of fraud.

Contractor non-disclosure agreements.

Verification of currency exchange rates.

Receipts for employee expenses.

120. An internal audit activity has to confirm the validity of the activities reported by a grantee that received a charitable contribution from the organization.

Which of the following methods would best help meet this objective?

Visiting the grantee to assess whether the execution of the project was in line with the defined grant scope.

Verifying that the grantee's final report is in line with what was depicted in the initial budget request.

Reconciling general ledger accounts used by management of the area under review for reflecting expenses on charitable contributions.

Interviewing employees of the corporate affairs department, which is responsible for charitable activities.

Page 13 of 16

121. Management requested internal audit consulting services. During fieldwork significant control issues were identified by the internal audit team.

Which of the following is an appropriate response from the chief audit executive?

End the consulting engagement and report the results to management as planned

Report the significant control issues to senior management and the board and recommend corrective action

Mutually agree with the engagement client on corrective actions

Focus on the consulting engagement and schedule an assurance engagement next to address the control issues

122. A chief audit executive (CAE) received a detailed internal report of senior management's internal control assessment.

Which of the following subsequent actions by the CAE would provide the greatest assurance over management's assertions?

Assert whether the described and reported control processes and systems exist.

Assess whether senior management adequately supports and promotes the internal control culture described in the report.

Evaluate the completeness of the report and management's responses to identified deficiencies.

Determine whether management's operating style and the philosophy described in the report reflect the effective functioning of internal controls.

123. To which of the following aspects should the chief audit executive give the most consideration while communicating an identified unacceptable risk to management?

The organization's attitude to hierarchy

The organization's whistleblowing strategy

The organization's ongoing risk monitoring process

The organization's risk management policy

124. 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?

Report the matter to the board

Implement the recommended control to address the exposure

Discuss the matter with senior management

Ask the regulatory agency to persuade management to address the issue

125. Which of the following approaches to understanding business processes is conducted from a broad organizational perspective and has the greatest risk of overlooking processes that are ultimately critical?

Process narrative.

Process mapping.

Bottom-up.

Top-down.

126. A corporate merger decision prompts the chief audit executive (CAE) lo propose interim changes to the existing annual audit plan to account for emerging risks.

Which of the following is the most appropriate action for the CAE to take regarding the changes made to the audit plan''

Present the revised audit plan directly to the board for approval.

Communicate with the chief financial officer and present the revised audit plan to the CEO tor approval

Present the revised audit plan directly to the CEO for approval

Communicate with the CEO and present the revised audit plan to the board for approval.

127. An internal auditor is preparing an internal control questionnaire for the procurement department as part of a preliminary survey.

Which of the following would provide the best source of information for questions?

A relevant procurement law or regulation.

A list of the company's vendors.

A review of a sample of tenders during the audited period.

A summary of the company's expenditures and their categories.

128. 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?

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

Observe whether the purchase orders are sequentially numbered.

Examine whether the sales department supervisor approves invoices for payment.

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

129. An internal auditor wants to assess the completeness of sales invoices issued by the organization over a period of time Providing that at the necessary data and analytics software is which of the following types of analyse would be appropriate to satisfy the auditor's objective?

Payment terms analysis

Duplicates analysts

Aging analysis

Gap analysis

130. Which type of assurance engagement is conducted to determine whether a process or area is performing as intended, accomplishing its objectives, and doing so in an efficient and economical way?

Compliance audit.

Operational audit.

Financial audit.

Provider audit.

Page 14 of 16

131. An internal auditor tested whether purchase orders were supported by appropriately approved purchase requisitions She sampled a population of purchase documents and identified instances where purchase requisitions were missing However, she did not notice that n some cases purchase requisitions were approved by an unauthorized person.

Which of the following risks most appropriately describes this situation?

Nonsampling risk

Sampling risk

Inherent risk

Due diligence risk

132. According to HA guidance, the chief audit executive is directly responsible for which of the following?

Maintaining a quality assurance program even in the absence of management support

Periodically reviewing and approving the internal audit charier

Providing opportunities for all staff auditors to satisfy their professional development requirements

Establishing the objectives scope and plan for each engagement

133. Senior management requested that the internal audit activity perform a consulting project to assist in making a decision on a new software system.

Which of the following would be used to determine the engagement objectives?

An assessment of risks to the business objectives

An understanding of the engagement client's expectations

The probability of significant errors fraud or noncompliance

Criteria previously established by the board

134. According to IIA guidance, which of the following best describes the purpose of a planning memorandum for an audit engagement?

It documents the audit steps and procedures to be performed.

It documents preliminary information useful to the audit team.

It documents events that could hinder the achievement of process objectives.

It documents existing measures that manage risks in the area under review.

135. Which of the following is a primary reason for an internal auditor to use a risk and control questionnaire when auditing financial processes?

To gam an understanding of the control environment

To collect as much financial data as possible before engagement fieldwork begins.

To test the effectiveness of financial controls in an efficient and relatively inexpensive way

To facilitate the quantification of financial data obtained

136. A large investment organization hired a chief risk officer (CRO) to be responsible for the organization's risk management processes.

Which of the following people should prioritize risks to be used for the audit plan?

Operational management, because they are responsible for the day-to-day management of the operational risks.

The CRO, because he is responsible for coordinating and project managing risk activities based on his specialized skills and knowledge.

The chief audit executive, although he is not accountable for risk management in the organization.

The CEO, because he has ultimate responsibility for ensuring that risks are managed within the agreed tolerance limits set by the board.

137. 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?

Judgmental sampling

Random sampling

Discovery sampling

Statistical sampling

138. During the fieldwork phase of an assurance engagement, the internal auditor decides that she wants to adjust the audit work program.

Which of the following is the most appropriate next step for the auditor to take?

Request additional information needed from management of the area under review.

Obtain approval from the engagement supervisor

Obtain the required resources, including I

to complete the work

Discuss the change in scope with management of the area under review.

139. The final engagement communication contains the following observation:

The internal auditor discovered that three of the 10 contracts reviewed failed to meet the organization's competitive bidding requirements Management explained that senior management deemed these purchases to be critical and awarded them as sole-source."

Which of the following components is missing in the documentation of the observation?

Criteria.

Effect

Condition

Cause

140. Which of the following should management action plans include at a minimum?

An implementer for the action plan

An owner of the action plan

The internal auditor's next review date of the action plan

Detailed procedures for the action plan

Page 15 of 16

141. Which of the following would present the most critical external risk to an organization?

The organization experiences a merger, and the management team is reorganized and redistributed globally

The organization launches a product into new global markets

After minimal testing, the organization implements a new system to replace a legacy system

Regulators announce broad legislative reforms applicable to the industry within which the organization operates

142. Which of the following statements is true regarding internal control questionnaires?

Internal control questionnaires are useful m evaluating the effectiveness of standard operating procedures

internal control questionnaires provide reliable documents allowing internal auditors to cover many control procedures in little time

Internal control questionnaires can be used by internal auditors as an interview guide

Internal control questionnaires provide direct audit evidence which may need corroboration

143. Which of the following statements is false regarding roles and responsibilities pertaining to risk management and control?

Senior management is charged with overseeing the establishment risk management and control processes.

The chief audit executive is responsible for overseeing the evaluation risk management and control processes.

Operating managers are responsible for assessing risks and controls in their departments.

Internal auditors provide assurance about risk management and control process effectiveness.

144. CORRECT TEXT

Which of the following is one of the five basic financial statement assertions when an internal auditor evaluates controls over financial reporting?

Reliability or appropriateness

Reasonableness

Existence or occurrence

Relevance

145. 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?

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

Complexity of the corrective action.

Impact that may result should the corrective action fail.

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

146. Which of the following sources of audit evidence is most reliable?

Evidence obtained directly from an untested third party.

Uncorroborated audit evidence obtained indirectly from an employee.

Undocumented audit evidence obtained directly from a manager.

Timely audit evidence obtained directly from a customer.

147. Which of the following analytical procedures should an internal auditor use to determine whether monthly expenses for the accounting department are reasonable?

A. Review year-over-year trending of total dollars spent in each period.

B. Review changes to the vendor master file for suspicious activity.

C. Review the percentage of on-time payments against prior periods.

D. Review total expenses for accounting against other department expenses in the organization.

148. Which of the following manual audit approaches describes testing the validity of a document by following it backward to a previously prepared record?

Tracing

Reperformance

Vouching

Walkthrough

149. During the planning phase of an assurance engagement, an internal auditor seeks to gam an understanding of now when the area under review is accomplishing its objectives.

When of the Following information-gathering techniques is the auditor most likely to use?

A review of the key performance indicators of me area under review.

A walkthrough of the key processes of the area under review.

An interview with the manager regarding the area's business plan.

A review of previous audit and follow- up results of the area under review

150. Which of the following statements describes an engagement planning best practice?

It is best to determine planning activities on a case-by-case basis because they can vary widely from engagement to engagement.

If the engagement subject matter is not unique, it is not necessary to outline specific testing procedures during the planning phase.

The engagement plan includes the expected distribution of the audit results, which should be kept confidential until the audit report is final.

Engagement planning activities include setting engagement objectives that align with audit client's business objectives.

Page 16 of 16

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

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

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

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

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

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