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IIA-CIA-Part2 Exam consists of 100 multiple-choice questions, which must be completed within two and a half hours. IIA-CIA-Part2 exam is computer-based and can be taken at a Prometric testing center or online. The passing score for the exam is 600 out of 800 points, and candidates receive their scores immediately after completing the exam.
To be eligible for the IIA-CIA-Part2 exam, candidates must have successfully completed the IIA-CIA-Part1 exam and meet the educational and professional requirements set by the IIA. IIA-CIA-Part2 exam consists of 100 multiple-choice questions and is administered through a computer-based testing system. Candidates have four hours to complete the exam, and a passing score of 600 or higher is required to earn the certification. The IIA-CIA-Part2 exam is a challenging and rigorous exam that requires candidates to have a deep understanding of the principles and practices of internal auditing. However, achieving this certification can open up many opportunities for career advancement and professional development in the field of internal auditing.
IIA-CIA-Part2 exam consists of 100 multiple-choice questions that test candidates' knowledge and understanding of internal audit practices, including risk management, governance, and internal control. Candidates must pass IIA-CIA-Part2 exam to move on to the third and final part of the CIA exam. Passing IIA-CIA-Part2 exam demonstrates to employers and clients that an individual has a strong understanding of the principles and practices of internal auditing, and is capable of providing valuable insights and recommendations to help organizations improve their operations and mitigate risk.
NEW QUESTION # 256
After issuance of the engagement final communication for an audit of an organization's accounts payable function, which of the following should be sent satisfaction surveys?
1. Manager of disbursements.
2. Controller.
3. Chief operating officer.
4. Audit committee members.
- A. I and II only
- B. II, III, and IV only
- C. I only
- D. II and III only
Answer: A
NEW QUESTION # 257
An internal auditor was assigned to review controls in the accounts payable function. Most of tie accounts payable processes are performed by a third-party service provider. The auditor included in the audit report a number of control deficiencies involving processes performed by the service provider. The service provider requested a copy of the report Which of Vie following would be the most appropriate response from the chief audit executive (CAE)?
- A. The CAE would automatically sand a copy of the report to the service provider as many of the findings relate to Via area managed by the service provider
- B. The CAE may provide a copy of the audit report to the service provider If an agreement & signed and the service provider agrees to reimburse the cost of the audit
- C. The CAE may distribute the report to tie service provider at no cost, after consulting with legal counsel and tie chief compliance officer
Answer: A
Explanation:
D, The CAE should benchmark with other organization in the industry by consorting with colleagues and distribute the report only I it is an acceptable practice m the industry
NEW QUESTION # 258
A bank uses a risk analysis matrix to quantify the relative risk of auditable entities. The analysis involves rating auditable entities on risk factors using a scale of 1 to 10, with 10 representing the greatest risk. A partial list of risk factors and the ratings given to three of the bank's departments is provided below:
Which of the following statements regarding risk in the department is true?
- A. The nature of department A's control structure may be justified by the nature of the department's assets and the complexity of its transactions.
- B. As compared to departments A and C, department B has a stronger control system to compensate for the greater complexity of the department's transactions and dollar value of its assets.
- C. The relative ranking of the departments in order of their risk, from greatest to least risk, is: A; C; B.
- D. The internal audit activity should schedule audits of department B more often than audits of department C because of the relative control strength of department C as compared to department
Answer: A
NEW QUESTION # 259
The objective of an internal audit engagement is to evaluate the organization's ethics program. Which of the following should be included in the scope of the engagement?
- A. Operational budget of the organization
- B. Established investigation protocols
- C. Organizational strategic plan
- D. Remuneration of ethics officers
Answer: B
Explanation:
Comprehensive and Detailed Explanation:
An effective ethics program requires clear policies, communication, monitoring, and investigation procedures.
To evaluate its adequacy, the auditor should examine established investigation protocols (B) - i.e., how allegations of misconduct are handled, investigated, and resolved. The strategic plan (A) is high-level and does not directly address ethics processes. The overall budget (C) is too broad, and officer remuneration (D) is not core evidence of program quality. According to IIA guidance, assessing the ethics program involves verifying that mechanisms exist for reporting, investigating, and addressing ethical issues. Therefore, the most relevant scope element is Option B.
NEW QUESTION # 260
The chief audit executive (CAE) determined that the internal audit activity lacks the resources needed to complete the internal audit plan Which of the following would be the most appropriate action tor the CAE to take?
- A. Recruit recent college graduates and employ them as audit interns with an aim to offer permanent employment
- B. Use guest auditors from within the organization, and leverage their experience by assigning them to lead engagements m areas where they previously worked
- C. Outsource some of the audits to the organization s external auditor who is already familiar with the organization
- D. Invite nonauditors to join the internal audit activity for a two-year rotational position, and assign them to join audit teams that are reviewing areas where they have no previous management responsibility
Answer: C
Explanation:
When the internal audit activity lacks the necessary resources to complete the audit plan, the most appropriate action for the CAE is to ensure that the audit plan is still executed effectively and efficiently. Outsourcing some of the audits to the organization's external auditor, who is already familiar with the organization, can help mitigate resource constraints. This approach leverages the external auditor's knowledge of the organization, ensuring continuity and quality in the audit process, while allowing the internal audit function to meet its obligations and deadlines.
Reference:
IIA Standard 2030: Resource Management
IIA Practice Guide: Coordinating Internal Audit and External Audit
NEW QUESTION # 261
Which of the following steps should an internal auditor complete when conducting a review of an electronic data interchange application provided by a third-party service?
1.Ensure encryption keys meet ISO standards.
2.Determine whether an independent review of the service provider's operation has been conducted.
3.Verify that the service provider's contracts include necessary clauses.
4.Verify that only public-switched data networks are used by the service provider
- A. 1 and 4
- B. 2 and 4.
- C. 2 and 3.
- D. 1 and 3.
Answer: C
Explanation:
When conducting a review of an electronic data interchange (EDI) application provided by a third-party service, the internal auditor should ensure several key aspects to maintain security and compliance:
* Independent Review of Service Provider: Determine whether an independent review of the service provider's operations has been conducted. This review helps ensure that the service provider meets necessary standards and maintains adequate controls.
* Contractual Clauses: Verify that the service provider's contracts include necessary clauses. These clauses should cover aspects like data security, confidentiality, compliance with standards, and performance metrics.
Ensuring encryption keys meet ISO standards and verifying the use of public-switched data networks are important but are more specific technical controls that might be part of broader reviews. The focus here should be on independent verification and robust contractual agreements
NEW QUESTION # 262
Which of the following sampling techniques is typically used when an internal auditor wants to test a large sample for fraud?
- A. Haphazard sampling
- B. Probability-proportional-to-size sampling
- C. Discovery sampling
- D. Stratified sampling
Answer: C
NEW QUESTION # 263
The chief audit executive (CAE) determined that the internal audit activity lacks the resources needed to complete the internal audit plan Which of the following would be the most appropriate action tor the CAE to take?
- A. Outsource some of the audits to the organization s external auditor who is already familiar with the organization
- B. Recruit recent college graduates and employ them as audit interns with an aim to offer permanent employment
- C. Invite nonauditors to join the internal audit activity for a two-year rotational position, and assign them to join audit teams that are reviewing areas where they have no previous management responsibility
- D. Use guest auditors from within the organization, and leverage their experience by assigning them to lead engagements m areas where they previously worked
Answer: C
NEW QUESTION # 264
The chief audit executive was asked to define me internal audit activity s key performance indicators (KPIs) tor the upcoming year. The KPIs must measure efficiency and effectiveness. Which of the following is an example of a KPI that measures effectiveness?
- A. Internal auditors identify a minimum number of issues and provide recommendations to address them for each audit
- B. There is a significant reduction of travel costs per project over the next fiscal year
- C. Post engagement surveys completed by management indicate a "meets or exceeds expectations" idling
- D. Internal audit reports are consistently submitted prior to the audit report deadline
Answer: C
Explanation:
A key performance indicator (KPI) that measures effectiveness reflects how well the internal audit activity achieves its objectives and meets stakeholder expectations. Post-engagement surveys completed by management, indicating a "meets or exceeds expectations" rating, directly measure the perceived value and impact of the audit work. This KPI shows whether the internal audit function is providing useful insights, recommendations, and assurance that align with management's needs and expectations, thus demonstrating the effectiveness of the audit activity.
Institute of Internal Auditors (IIA), Practice Guide - Measuring Internal Audit Effectiveness and Efficiency.
NEW QUESTION # 265
When developing the scope of an audit engagement, which of the following would the internal auditor typically not need to consider?
- A. The potential impact of key risks.
- B. The operational and geographic boundaries.
- C. The need and availability of automated support.
- D. The expected outcomes and deliverables.
Answer: C
Explanation:
When developing the scope of an audit engagement, the internal auditor typically considers factors that directly impact the audit's objectives, risks, and execution. This includes the potential impact of key risks (Option B), the expected outcomes and deliverables (Option C), and the operational and geographic boundaries (Option D). While the need and availability of automated support (Option A) may be a practical consideration for how the audit is conducted, it is not fundamental to defining the scope of the audit engagement itself. The scope is primarily concerned with what is to be audited and why, rather than how the audit will be performed.
IIA Standard 2200: Engagement Planning.
IIA Practice Guide on Audit Engagement Planning.
NEW QUESTION # 266
Which of the blowing is an example of a compliance assurance engagement?
- A. Proving in-house training to senior management regarding applicable laws and regulations
- B. Providing testing on the operating effectiveness of controls ever the reliability of financial reporting
- C. Proving an assessment of the design adequacy of controls related to consumer privacy and confidentially.
- D. Providing an assessment of customer satisfaction with customer service provided by the organization
Answer: C
Explanation:
A compliance assurance engagement focuses on evaluating whether an organization is adhering to applicable laws, regulations, policies, and procedures. Assessing the design adequacy of controls related to consumer privacy and confidentiality is a prime example of such an engagement, as it ensures that the organization's controls are designed to comply with relevant privacy laws and regulations, thereby protecting consumer data and maintaining compliance.
:
The Institute of Internal Auditors (IIA) - Standards for the Professional Practice of Internal Auditing, Standard
2410 - Criteria for Communicating
NEW QUESTION # 267
A company's cellular phone costs vary significantly by sales representative and by month. Which of the following would be the most appropriate approach for a consulting project concerning this issue?
- A. Control self-assessment involving sales representatives.
- B. Performance measurement and design of the budgeting process.
- C. Business process review of cellular phone needs.
- D. Benchmarking with other cellular phone users.
Answer: C
NEW QUESTION # 268
Which of the following would have the least impact (either positive or negative) on an assessment of a department's control environment?
- A. Many department functions were duplicated or verified by other department employees as part of the department's normal procedures.
- B. Audit tests designed to verify compliance with control procedures detected a general failure to follow standard procedures for transaction authorization.
- C. The department manager sets a tone of honesty and integrity in all business dealings and this tone is emulated by department personnel.
- D. The department managed long-term investments, including investment in derivatives and other financial instruments, to maximize return.
Answer: D
NEW QUESTION # 269
Which of the following best defines an engagement conclusion?
- A. An opinion that must be included in the engagement final communication.
- B. An auditor's professional judgment of the situation which was reviewed.
- C. A recommendation for corrective action.
- D. An auditor's determination of the cause of an engagement observation.
Answer: B
NEW QUESTION # 270
Which of the following statement is consistent with IIA guidance the use of mentoring for internal auditors?
- A. The member and the internal auditor should opt for informal meetings even if it means that no formal documentation will be created.
- B. The mentor relationship is usually not suitable for internal audit staff, as it does not leas to professional development.
- C. 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.
- D. The mentor should be the internal auditor's supervisor to ensure that the auditor performance is assessed in a relevant and meaningful context.
Answer: A
Explanation:
According to IIA guidance, mentoring relationships can significantly enhance professional development for internal auditors. Informal meetings between the mentor and the mentee allow for more open and flexible interactions, fostering a supportive environment for learning and development. While formal documentation can be useful, the primary value of mentoring often comes from the informal, ongoing dialogue and relationship that supports continuous learning and professional growth.
Reference:
The Institute of Internal Auditors (IIA) - Practice Guide: Talent Management
NEW QUESTION # 271
Flowcharts are useful during audit planning because they contain information that may help internal auditors with which of the following?
- A. Determining the size of the audit team needed to perform the review.
- B. Understanding management's risk tolerance.
- C. Understanding business processes.
- D. Understanding organizational objectives.
Answer: C
Explanation:
Flowcharts are a valuable tool in internal auditing, particularly during the audit planning phase. They provide a visual representation of business processes, which helps internal auditors gain a comprehensive understanding of how these processes function.
Detailed Explanation:
Understanding Business Processes:
Flowcharts are used to depict the steps in a process, illustrating how inputs are transformed into outputs, the sequence of activities, and the points where decisions are made. This visual representation makes it easier for auditors to understand the flow of transactions, identify potential control points, and recognize areas where risks may arise.
IIA Standard 2201 - Planning Considerations:
According to this standard, internal auditors must consider the objectives, scope, and risks associated with the audit engagement during the planning phase. Understanding business processes is crucial for this, and flowcharts are an effective way to achieve this understanding.
IIA Practice Advisory 2210.A1-1:
This advisory suggests using various tools, including flowcharts, to enhance understanding of the area under review. Flowcharts help auditors see the process as a whole and identify where controls should be in place.
Why Not Other Options?
Option A (Understanding management's risk tolerance): Flowcharts focus on processes, not on management's subjective risk tolerance.
Option C (Determining the size of the audit team): While flowcharts provide process insights, they do not directly inform team size decisions.
Option D (Understanding organizational objectives): Flowcharts focus on specific processes rather than high-level organizational objectives.
Conclusion: Option B is correct as it aligns with the purpose of flowcharts in audit planning, which is to understand business processes effectively.
NEW QUESTION # 272
An internal auditor discovered fraud while performing an audit of an organization's procurement process.
Which of the following describes the greatest benefit of using forensic auditing techniques in this scenario?
- A. Greater assurance that procurement frauds will be detected in a timely manner
- B. Enhanced capability to prevent frauds from occurring.
- C. Greater understanding of fraud through better evidence collection
- D. Improved capability of evaluating fraud risks within the organization.
Answer: C
Explanation:
Forensic auditing techniques provide a systematic approach to collecting and analyzing evidence related to fraud. The primary benefit of these techniques is the enhanced ability to gather comprehensive and detailed evidence, which leads to a greater understanding of how the fraud occurred and who was involved. This detailed evidence collection supports legal proceedings and helps in identifying control weaknesses that need to be addressed to prevent future frauds.
References:
"Forensic Auditing: Principles and Practices," which outlines the importance of evidence collection in understanding and combating fraud.
NEW QUESTION # 273
According to IIA guidance, which of the following factors should the auditor in charge consider when determining the resource requirements for an audit engagement?
- A. The number, proficiency, experience, and availability of audit staff as well as the ability to coordinate with external auditors.
- B. The appropriateness and sufficiency of resources and the ability to coordinate with external auditors.
- C. The appropriateness and sufficiency of resources as well as the nature, complexity, and time constraints of the engagement.
- D. The number, experience, and availability of audit staff as well as the nature, complexity, and time constraints of the engagement.
Answer: D
Explanation:
According to IIA guidance, the auditor in charge should consider the number, experience, and availability of audit staff as well as the nature, complexity, and time constraints of the engagement when determining resource requirements. These factors ensure that the engagement is staffed appropriately and that the audit team has the necessary skills and time to perform the audit effectively.
IIA Standards: 2230 - Engagement Resource Allocation
IIA Practice Guide: Coordination and Reliance: Developing an Assurance Map
NEW QUESTION # 274
An internal auditor was reviewing the procurement department's tender documentation for completeness He documented all discrepancies but the procurement manager disagreed with his findings Upon further review, the internal auditor noted that all discrepancies had been corrected in the tender database. Which of the following courses of action would have prevented this situation?
- A. The auditor should have extracted a list of logs and identified any actions that were executed in the database during the audit
- B. The auditor should have ensured the preservation of audit evidence by taking screenshots or extracting tender documents
- C. The internal auditor should have created a more thorough work program, which would address audit criteria and potential causes in more detail
- D. The auditor should have instructed procurement workers that changes to the database during the course of the audit were strictly forbidden
Answer: B
Explanation:
To prevent the situation where discrepancies identified by the auditor are corrected after being noted, it is essential to preserve the audit evidence. Taking screenshots or extracting tender documents would provide a permanent record of the discrepancies, ensuring that any subsequent changes do not invalidate the auditor's findings. This practice is crucial for maintaining the integrity of the audit evidence and supporting the audit conclusions. Option B is related but not as direct as preserving primary evidence. Options C and D do not address the preservation of evidence effectively.References: The IIA's International Standards for the Professional Practice of Internal Auditing, Standard 2310 - Identifying Information.
NEW QUESTION # 275
A company used simple regression analysis to analyze maintenance costs against machine hours (MH) for a
26-week period when the plant was in full operation. The regression yielded the following estimated cost function:
Maintenance Cost = $60 + $0.25/MH
The regression analysis also generated a coefficient of determination (R2), or goodness of fit, of 0.85. Which of the following statements regarding this regression analysis is appropriate?
- A. The $60 component represents the best estimate of fixed maintenance costs for the company in a shutdown situation.
- B. The coefficient of determination of R2 = 0.85 indicates that the goodness of fit is poor because the value is close to the maximum value of one.
- C. The $0.25 component is the slope coefficient of the cost estimate and represents the average variable maintenance cost per machine hour.
- D. This regression can be used to determine the maintenance cost for any period at any activity level by substituting the machine hours in the equation.
Answer: C
NEW QUESTION # 276
According to IIA guidance, which of the following individuals should receive the final audit report on a compliance engagement for the organization's cash disbursements process?
- A. The accounts payable manager, chief financial officer, and audit committee.
- B. The accounts payable manager, purchasing manager, and receiving manager.
- C. The accounts payable supervisor, controller, and treasurer.
- D. The accounts payable supervisor, accounts payable manager, and controller.
Answer: D
NEW QUESTION # 277
Given the scarcity of internal audit resources, a chief audit executive (CAE) decides not to schedule a follow-up of audit recommendations when developing engagement work schedules. Why does the CAE's decision violate the Standards?
- A. It is not the CAE's responsibility to establish a process for a follow-up.
- B. When resources are scarce, the follow-up can be incorporated into the next engagement.
- C. Lack of resources is not a sufficient reason to forgo a follow-up.
- D. Follow-up actions should take priority over new engagements in scheduling.
Answer: C
NEW QUESTION # 278
Which of the following statements regarding the use of external contracted services by the chief audit executive (CAE) is false?
- A. The expert should be directed by the objectives and scope of work.
- B. The external expert could have a prior relationship with the audit client.
- C. The CAE's responsibility is not impaired by engaging an external expert.
- D. The audit report should not disclose the use of contracted services.
Answer: D
NEW QUESTION # 279
An internal auditor is assessing the organization's risk management framework. Which of the following formulas should he use to calculate the residual risk?
A)
B)
C)
D)
- A. Option C
- B. Option B
- C. Option D
- D. Option A
Answer: A
Explanation:
The appropriate formula to calculate residual risk is (Probability of events) × (Impacts). Residual risk is the risk that remains after controls are implemented to mitigate the inherent risk. It reflects the remaining exposure after considering the effectiveness of existing controls. This formula takes into account the likelihood of an event occurring and the potential impact if it does occur. References: IIA Practice Guide - Assessing the Adequacy of Risk Management Processes, COSO Framework
NEW QUESTION # 280
Which of the following processes real-transaction data through auditor-developed test programs?
- A. Parallel simulation.
- B. Mapping.
- C. Tracing.
- D. Generalized audit software.
Answer: A
NEW QUESTION # 281
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