Practice Free IIA-CIA-Part2 Exam Online Questions
Which of the following is least likely to help ensure that risk is considered in a work program?
- A . Risks are discussed with audit client.
- B . All available information from the risk-based plan is used.
- C . Client efforts to affect risk management are considered.
- D . Prior risk assessments are considered.
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?
- A . Compare the firm’s financial performance with organizations in the same industry
- B . Interview all managers involved in preparing the financial statements
- C . Perform a bank reconciliation to confirm the cash balance in the financial statements.
- D . Trace each financial transaction to the original supporting document
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?
- A . Compare the firm’s financial performance with organizations in the same industry
- B . Interview all managers involved in preparing the financial statements
- C . Perform a bank reconciliation to confirm the cash balance in the financial statements.
- D . Trace each financial transaction to the original supporting document
Upon concluding the engagement fieldwork an internal auditor discusses the audit findings with operational management.
There is a greater likelihood that the auditor will obtain a responsive action plan from management when both parties agree on which of the following attributes of the audit finding?
- A . Criteria
- B . Condition
- C . Cause
- D . Effect
Upon concluding the engagement fieldwork an internal auditor discusses the audit findings with operational management.
There is a greater likelihood that the auditor will obtain a responsive action plan from management when both parties agree on which of the following attributes of the audit finding?
- A . Criteria
- B . Condition
- C . Cause
- D . Effect
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?
- A . Performing a reasonableness test.
- B . Conducting a fraud investigation.
- C . Conducting trend analysis.
- D . Operating with impaired objectivity.
A
Explanation:
A reasonableness test involves comparing data against logical expectations or constraints to identify anomalies. In this case, the comparison of warehouse size to inventory levels represents a reasonableness test. Conducting a fraud investigation (Option B) would require stronger evidence of wrongdoing. Trend analysis (Option C) examines patterns over time, which is not the auditor’s approach here. Option D is irrelevant, as the auditor’s actions do not impair objectivity.
Which of the following best describes the guideline for preparing audit engagement workpapers?
- A . Workpapers should be understandable to the auditor in charge and the chief audit executive.
- B . Workpapers should be understandable to the audit client and the board.
- C . Workpapers should be understandable to another internal auditor who was not involved in the engagement.
- D . Workpapers should be understandable to external auditors and regulatory agencies.
C
Explanation:
The primary guideline for preparing audit engagement workpapers is that they should be understandable to another internal auditor who was not involved in the engagement. This ensures that workpapers are clear, complete, and sufficiently detailed so that another auditor can understand the work performed, the evidence gathered, and the conclusions reached without needing additional explanations.
IIA
Reference: IIA Standard 2330: Documenting Information requires internal auditors to document relevant information to support the conclusions and engagement results. The Practice Advisory 2330-1 emphasizes that workpapers should be understandable and provide a clear trail of the audit process and conclusions, facilitating peer review and quality assurance processes.
The IIA’s Practice Guide on Audit Documentation suggests that workpapers should be prepared with the understanding that another internal auditor, unfamiliar with the work, may need to review them for quality assurance or other purposes.
Which of the following best describes the guideline for preparing audit engagement workpapers?
- A . Workpapers should be understandable to the auditor in charge and the chief audit executive.
- B . Workpapers should be understandable to the audit client and the board.
- C . Workpapers should be understandable to another internal auditor who was not involved in the engagement.
- D . Workpapers should be understandable to external auditors and regulatory agencies.
C
Explanation:
The primary guideline for preparing audit engagement workpapers is that they should be understandable to another internal auditor who was not involved in the engagement. This ensures that workpapers are clear, complete, and sufficiently detailed so that another auditor can understand the work performed, the evidence gathered, and the conclusions reached without needing additional explanations.
IIA
Reference: IIA Standard 2330: Documenting Information requires internal auditors to document relevant information to support the conclusions and engagement results. The Practice Advisory 2330-1 emphasizes that workpapers should be understandable and provide a clear trail of the audit process and conclusions, facilitating peer review and quality assurance processes.
The IIA’s Practice Guide on Audit Documentation suggests that workpapers should be prepared with the understanding that another internal auditor, unfamiliar with the work, may need to review them for quality assurance or other purposes.
Which of the following is essential for ensuring that the internal audit activity’s findings and recommendations receive adequate consideration?
- A . Reporting results of audits with recommendations to management.
- B . Providing formal follow-up procedures to ensure that management complies with an action plan or accepted risk of not taking action.
- C . Reporting quarterly to management that the audit plan is focused on higher exposures of risk.
- D . Discussing audit findings with independent auditors.
B
Explanation:
For internal audit findings and recommendations to be effectively implemented and to ensure that they receive adequate consideration, formal follow-up procedures are essential. According to IIA guidance, it is important that the internal audit activity not only reports the results to management but also ensures that corrective actions are taken or that management consciously accepts the associated risks.
Detailed Explanation
IIA Standard 2500 C Monitoring Progress:
This standard requires that the chief audit executive (CAE) establish a process to monitor and ensure that management actions are effectively implemented or that risks are appropriately accepted. Follow-up is crucial for verifying that management has taken the recommended actions or has acknowledged and accepted the risk of not doing so.
Formal Follow-Up Procedures:
These procedures involve tracking the status of management’s responses to audit recommendations, checking if actions were implemented as planned, and determining whether the intended outcomes were achieved. If management decides not to act, the CAE must ensure that the decision is documented and the associated risks are understood and accepted by senior management. IIA Practice Advisory 2500-1:
This advisory emphasizes the importance of follow-up to ensure that significant audit findings and
recommendations are addressed. Without this follow-up, there is a risk that important issues might
be neglected or forgotten.
Why Not Other Options?
Option A (Reporting results with recommendations): While reporting is important, it does not ensure that recommendations are acted upon.
Option C (Quarterly reporting on audit plan focus): This is related to audit planning, not to ensuring that specific findings and recommendations are considered.
Option D (Discussing findings with independent auditors): This might be useful, but it does not directly influence whether management considers and acts on the internal audit findings.
The human resources (HR) department was last reviewed three years ago and is due for an assurance engagement after undergoing recent process changes.
Which of the following would the most effective option identify the HR department’s risks and controls?
- A . Meet with the chief operating officer 10 obtain Information about the MR department
- B . Review the previous internal audit report and locus on key audit observations and action plans
- C . Review the organization’s risk strategy and risk appetite framework
- D . Discuss the department’s present strategies ‘and objectives with the head of the HR department