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To be eligible to take the IIA-CIA-Part2 exam, candidates must have completed the first part of the CIA program, which covers the essentials of internal auditing. Candidates must also meet certain education and experience requirements set by the IIA. Once candidates have met these requirements, they can register for the exam and begin preparing for it.
NEW QUESTION # 144
An internal auditor submitted a report containing recommendations for management to enhance internal controls related to investments. To follow up, which of the following is the most appropriate action for the internal auditor to take?
- A. Follow up during the next scheduled audit.
- B. Observe corrective measures.
- C. Conduct appropriate testing to verify management responses.
- D. Seek a management assurance declaration.
Answer: C
Explanation:
To ensure that recommendations for enhancing internal controls have been effectively implemented, the internal auditor should conduct appropriate testing to verify management responses. This involves re- performing procedures, reviewing documentation, and possibly observing operations to confirm that the corrective actions have been adequately executed and are effective. Simply seeking a management assurance declaration (Option B) or observing corrective measures (Option A) may not provide sufficient evidence of proper implementation. Following up during the next scheduled audit (Option C) may delay the verification process, potentially allowing risks to persist.
:
IIA Standard 2500: Monitoring Progress.
IIA Practice Guide on Follow-up Processes in Internal Auditing.
NEW QUESTION # 145
Once an audit report is drafted, the auditor's supervisor should review it primarily to ensure that all:
- A. Statements are supported and can be authenticated.
- B. Processes within the audited area were reviewed.
- C. Sample sizes appear appropriate for any issues found.
- D. Recommendations for corrective action are clear.
Answer: A
Explanation:
Section: Volume B
NEW QUESTION # 146
Which of the following topics must the internal audit staff discuss with management during the exit conference?
1. Issues identified during the audit.
2. Evaluation criteria used to select controls for testing.
3. Staff who were interviewed during the audit.
4. The reporting process for the draft and final report.
- A. 2 and 3 only
- B. 1 and 4 only
- C. 2 and 4 only
- D. 1 and 3 only
Answer: B
NEW QUESTION # 147
Which of the following best describes how an internal auditor would use a flowchart during engagement planning?
- A. To plan for evaluating potential losses
- B. To evaluate the design of controls
- C. To prepare for testing the effectiveness of controls
- D. To prepare a sampling plan for the engagement
Answer: B
NEW QUESTION # 148
Acceding to MA guidance, when of the Mowing strategies would like provide the most assurance to the chief audit executive (CAE) that the internal audit activity's recommendations are being acted upon?
- A. The CAE works with the engagement supervisor to monitor the recommendations issued to management for corrective action
- B. The CAE develops a tracking system to monitor the stains of engagement recommendations reported to management for action
- C. The CAF obtains a formal response from senior management regarding the corrective actions they plan to take w address the recommendations.
- D. The CAE communicates with impacted department managers to determine whether corrective actions have addressed engagement recommendations
Answer: B
NEW QUESTION # 149
An internal auditor at a bank informed the branch manager of a malfunctioning lock on one of the vaults. The risk associated with this issue was deemed significant by the chief audit executive (CAE), and immediate remediation was recommended However during a follow-up engagement the branch manager told the CAE that the risk was actually not significant, hence no action was taken. What is the most appropriate next step for the CAE?
- A. Document the branch manager's decision to accept the risk otherwise, no other speak: course of action is required.
- B. Have another discussion with the branch manager attempt to change his view, and encourage him to movement the recommendations
- C. Inform senior management that the branch manager deeded to cancel the committed action plan without any previous communication
- D. Discuss the issue with the board which has ultimate responsibility to resolve the risk
Answer: C
NEW QUESTION # 150
Which of the following recommendations made by the internal audit activity (IAA) is most likely to help prevent fraud?
- A. A review of internal service-level agreement compliance in financial services found that requests for information frequently are fulfilled up to two weeks late. The IAA recommends that the financial services unit be eliminated for its ineffectiveness.
- B. A review of password policy compliance found that employees frequently use the same password more than once during a year. The IAA recommends that the access control software reject any password used more than once during a 12-month period.
- C. A vacation policy compliance review found that employees frequently leave on vacation before their leave applications are signed by their manager. The IAA recommends that the manager attend to the leave applications in a more timely fashion.
- D. A review of customer service-level agreements found that orders to several customers are frequently delivered late. The IAA recommends that the organization extend the expected delivery time advertised on its website.
Answer: B
Explanation:
Section: Volume E
NEW QUESTION # 151
Which of the following are key characteristics of enterprise risk management?
It considers risk in the formulation of strategy.
It applies risk management in some units of an entity.
It takes a portfolio view of risks throughout the enterprise.
It restricts the organization's ability to seize opportunities inherent in future events.
- A. 1 and 4 only.
- B. 2 and 3 only.
- C. 2 and 4 only.
- D. 1 and 3 only.
Answer: D
NEW QUESTION # 152
Risk assessments can vary in format, but generally include:
1. A description of identified risks.
2. Tests of audit controls.
3. A system of rating risks.
4. Sample size identification.
- A. 1 and 3 only
- B. 2, 3, and 4 only
- C. 1, 3, and 4 only
- D. 1 and 2 only
Answer: A
Explanation:
Section: Volume C
NEW QUESTION # 153
An internal auditor at an electricity provider analyzes data sets related to customers' household electricity usage, including payments, consumption, profiles, etc. The objective is to assess the completeness of the invoicing process. Which of the following would be the best approach to fulfill this purpose?
- A. Conduct a ratio analysis by calculating the relationship between sums paid in local currency and volume of electricity billed in megawatt hours
- B. Conduct an analysis of clients' electricity consumption patterns within a specified period and identify consumption spikes
- C. Conduct a trend analysis of customers' payment history and flag those with the most inconsistent payments and debts
- D. Conduct a comparison to identify deviations between electricity amounts billed to customers and information regarding actual consumption
Answer: D
Explanation:
Comprehensive and Detailed Explanation:
Completeness in invoicing means that all services delivered (electricity consumed) are properly billed.
Therefore, the most effective approach is directly comparing consumption data with billed amounts (D) to identify unbilled usage. Options A and C provide insight into payment behavior or consumption trends but do not test billing completeness. Option B (ratio analysis) could provide high-level patterns but would not pinpoint specific missing invoices. The most reliable procedure is a one-to-one reconciliation between metered consumption and invoicing data, as it ensures every unit of electricity delivered is accounted for in billing. This method aligns with IIA Standard 2310 - Identifying Information, which requires sufficient, relevant, and reliable evidence to support audit conclusions. By directly comparing inputs (consumption) and outputs (invoices), the auditor can identify systemic gaps, errors, or fraud in the billing process.
NEW QUESTION # 154
During an interview with a manager in a company's claims department, an auditor noted that the manager became nervous and changed the subject whenever the auditor raised questions about certain types of claims. The manager's answers were consistent with company policies and procedures. When documenting the interview, the auditor should:
- A. Conclude that the nonverbal communication is persuasive and that sufficient evidence exists to begin a fraud investigation.
- B. Disregard the interview entirely because the verbal and nonverbal communications were contradictory.
- C. Document the manager's answers but not the nonverbal communication because it is subjective and is not corroborated.
- D. Document the manager's answers, noting the nature of the nonverbal communication.
Answer: D
NEW QUESTION # 155
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 are a. Which of the following approaches would be most useful to obtain relevant information to support the engagement objective?
- A. Review the procurement process map w*h employees who carry out key activities to obtain their input and insights.
- B. Complete a transaction walkthrough fiat focuses on the design and operation of financial reporting controls
- C. Conduct interviews with senior management to obtain their input and insights regarding operational controls.
- D. Perform a comprehensive review of the organization s existing policies and standard operating procedures.
Answer: A
Explanation:
To identify opportunities to improve the efficiency of the organization's procurement process, the internal auditor needs to understand the current state of the process and gather detailed insights from those directly involved. Reviewing the procurement process map with employees who carry out key activities allows the auditor to understand the practical aspects of the process, identify any inefficiencies or bottlenecks, and obtain valuable suggestions for improvements from those who are most familiar with the daily operations. This approach ensures that the information gathered is relevant, practical, and actionable.
Reference:
The Institute of Internal Auditors (IIA) - Practice Guide: Business Process Improvement
NEW QUESTION # 156
An internal audit team was conducting an assurance engagement to review segregation of duties in the purchasing function. The internal auditors reviewed a sample of purchase orders from the past two year and discovered that 2 percent were signed by employees who were operating in a designated acting capacity due to employee absence. According to IIA guidance, which of the following attributes of information would most likely assist the auditor in deciding whether to report this finding?
- A. Reliability
- B. Sufficiency
- C. Relevance
- D. Usefulness
Answer: B
Explanation:
When deciding whether to report a finding, the sufficiency of the information is critical. Sufficiency refers to the quantity of information obtained to support audit conclusions and recommendations. In this case, the internal auditors need to ensure that the sample size and the evidence collected are adequate to demonstrate that the issue of employees signing purchase orders in a designated acting capacity due to employee absence is significant enough to report. Ensuring sufficiency helps validate that the finding is well-supported and justifies its inclusion in the audit report.References:
* The Institute of Internal Auditors (IIA) - Standards for the Professional Practice of Internal Auditing, Standard 2310 - Identifying Information
NEW QUESTION # 157
Which of the following would be the most effective fraud prevention control?
- A. Daily report that Identifies unsuccessful system log-in attempts
- B. Email alert sent to management for checks issued over S100.000.
- C. New hire training to explain fraud and employee misconduct.
- D. installation of a video surveillance system in a warehouse prone to inventory loss
Answer: C
Explanation:
Training new hires on fraud and employee misconduct is a proactive measure that raises awareness and educates employees about the organization's policies and the consequences of fraudulent behavior.
Such training helps create a culture of integrity and compliance, making employees less likely to engage in or tolerate fraud.
Continuous education and reinforcement of ethical behavior are essential components of an effective fraud prevention strategy
NEW QUESTION # 158
Which of the following is more likely to be present in a highly centralized organization?
- A. Micromanagement
- B. The ability to make rapid changes
- C. Authority pushed downward
- D. Empowered employees
Answer: A
Explanation:
Highly centralized organizations concentrate decision-making at the top. This often results in micromanagement (B).
* Option A (rapid change) and C (empowerment) are more aligned with decentralized structures.
* Option D contradicts centralization, since authority is not pushed downward.
NEW QUESTION # 159
What is the primary purpose of issuing a preliminary communication to management of the area under review?
- A. To build good relations with management
- B. To help management develop more responsive and timely action plans
- C. To improve the internal audit key performance indicators
- D. To formally report medium- and high-risk observations in writing
Answer: B
Explanation:
The primary purpose of issuing a preliminary communication to management of the area under review is to help them develop more responsive and timely action plans. Preliminary communications, such as interim reports or discussions, inform management about the audit's progress, preliminary findings, and potential issues. This early communication allows management to begin addressing identified issues before the final report, leading to more timely and effective corrective actions. It also fosters collaboration and ensures management is engaged in the remediation process from the outset.
The IIA's International Standards for the Professional Practice of Internal Auditing, Standard 2410.A1 - Communication Criteria.
NEW QUESTION # 160
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IIA-CIA-Part2 Certification Exam is a computer-based exam that is administered at Pearson VUE testing centers around the world. It is available in multiple languages, including English, Spanish, French, German, and Chinese. Candidates can register for the exam online and schedule a testing date and time that is convenient for them.
IIA-CIA-Part2 Exam, also known as the Practice of Internal Auditing, is a certification exam offered by the Institute of Internal Auditors (IIA). It is designed to test the knowledge and skills of internal auditors who are responsible for planning, performing, and reporting the results of internal audits. IIA-CIA-Part2 exam covers a wide range of topics related to internal auditing, including risk management, governance, and internal control.
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