Practice Free IIA-CIA-Part2 Exam Online Questions
An internal auditor is using computer-assisted audit techniques to examine employee expenses across several divisions of the organization.
Which of the following is true in this situation?
- A . The data from various sources should remain segregated for easier analysis and discovery of anomalies.
- B . Fraud detection techniques should be performed against full data populations.
- C . A reactive approach is best suited for fraud detection due to the effectiveness of tips and whistleblowing programs.
- D . Random sampling is an effective method of detecting fraudulent transactions.
B
Explanation:
In internal auditing, the use of Computer-Assisted Audit Techniques (CAATs) allows auditors to analyze large datasets efficiently and effectively. When it comes to fraud detection, analyzing the full population of data is often the best approach.
Detailed Explanation
IIA Practice Guide on CAATs:
CAATs enable auditors to analyze entire datasets rather than relying on samples. This approach is particularly useful in fraud detection, where anomalies or fraudulent transactions may be rare and could be missed if only a sample is analyzed.
Full Population Analysis:
By analyzing the entire dataset, the auditor can identify patterns, anomalies, and outliers that could indicate fraudulent activity. This comprehensive approach increases the likelihood of detecting fraud. IIA Standard 1220 C Due Professional Care:
This standard requires auditors to exercise due care, which includes considering the use of CAATs for fraud detection to ensure that all relevant data is reviewed, not just a subset.
Why Not Other Options?
Option A (Data should remain segregated): Keeping data segregated may complicate the analysis and hinder the discovery of cross-division anomalies.
Option C (Reactive approach): While tips and whistleblowing are important, a proactive approach using CAATs to analyze full populations is more effective in detecting fraud.
Option D (Random sampling): Sampling may not be sufficient to detect fraud, as it could miss infrequent but significant fraudulent transactions.
An internal auditor is using computer-assisted audit techniques to examine employee expenses across several divisions of the organization.
Which of the following is true in this situation?
- A . The data from various sources should remain segregated for easier analysis and discovery of anomalies.
- B . Fraud detection techniques should be performed against full data populations.
- C . A reactive approach is best suited for fraud detection due to the effectiveness of tips and whistleblowing programs.
- D . Random sampling is an effective method of detecting fraudulent transactions.
B
Explanation:
In internal auditing, the use of Computer-Assisted Audit Techniques (CAATs) allows auditors to analyze large datasets efficiently and effectively. When it comes to fraud detection, analyzing the full population of data is often the best approach.
Detailed Explanation
IIA Practice Guide on CAATs:
CAATs enable auditors to analyze entire datasets rather than relying on samples. This approach is particularly useful in fraud detection, where anomalies or fraudulent transactions may be rare and could be missed if only a sample is analyzed.
Full Population Analysis:
By analyzing the entire dataset, the auditor can identify patterns, anomalies, and outliers that could indicate fraudulent activity. This comprehensive approach increases the likelihood of detecting fraud. IIA Standard 1220 C Due Professional Care:
This standard requires auditors to exercise due care, which includes considering the use of CAATs for fraud detection to ensure that all relevant data is reviewed, not just a subset.
Why Not Other Options?
Option A (Data should remain segregated): Keeping data segregated may complicate the analysis and hinder the discovery of cross-division anomalies.
Option C (Reactive approach): While tips and whistleblowing are important, a proactive approach using CAATs to analyze full populations is more effective in detecting fraud.
Option D (Random sampling): Sampling may not be sufficient to detect fraud, as it could miss infrequent but significant fraudulent transactions.
The chief audit executive (CAE) for a manufacturing company included in this year s audit plan a review of the company’s laboratory, using an experienced external service provider. The audit plan was approved by the audit committee without any changes At the time of engaging the external service provider, the CAE also secured the approval from the CEO.
Who is responsible for ensuring that the conclusions reached for this exercise are adequately supported?
- A . Audit committee
- B . CEO
- C . CAE.
- D . External service provider
The chief audit executive (CAE) for a manufacturing company included in this year s audit plan a review of the company’s laboratory, using an experienced external service provider. The audit plan was approved by the audit committee without any changes At the time of engaging the external service provider, the CAE also secured the approval from the CEO.
Who is responsible for ensuring that the conclusions reached for this exercise are adequately supported?
- A . Audit committee
- B . CEO
- C . CAE.
- D . External service provider
Which of the following is the primary reason for internal auditors to conduct interim communications with management of the area under review?
- A . To demonstrate good project oversight
- B . To provide timely discussion of results
- C . To demonstrate internal auditor proficiency
- D . To follow up on previously requested information
In addition to gathering information, which of the following is a primary objective of a client interview conducted during the planning stage of an audit engagement?
- A . To obtain sufficient audit evidence.
- B . To test the client’s knowledge.
- C . To agree on the auditor’s scope of authority.
- D . To establish rapport.
D
Explanation:
In addition to gathering information, a primary objective of a client interview during the planning stage of an audit engagement is to establish rapport with the client. Building rapport helps in fostering a cooperative relationship, ensuring that the client is open and forthcoming with information, which can significantly enhance the effectiveness of the audit. IIA
Reference: IIA Standard 2201: Planning Considerations suggests that internal auditors should establish good communication and rapport with clients during the planning phase to facilitate the audit process. The Practice Guide on Effective Interviewing Techniques emphasizes that establishing rapport during initial meetings is crucial for gaining the client’s trust and cooperation throughout the audit.
In addition to gathering information, which of the following is a primary objective of a client interview conducted during the planning stage of an audit engagement?
- A . To obtain sufficient audit evidence.
- B . To test the client’s knowledge.
- C . To agree on the auditor’s scope of authority.
- D . To establish rapport.
D
Explanation:
In addition to gathering information, a primary objective of a client interview during the planning stage of an audit engagement is to establish rapport with the client. Building rapport helps in fostering a cooperative relationship, ensuring that the client is open and forthcoming with information, which can significantly enhance the effectiveness of the audit. IIA
Reference: IIA Standard 2201: Planning Considerations suggests that internal auditors should establish good communication and rapport with clients during the planning phase to facilitate the audit process. The Practice Guide on Effective Interviewing Techniques emphasizes that establishing rapport during initial meetings is crucial for gaining the client’s trust and cooperation throughout the audit.
An internal audit report includes a recommendation to remove inappropriate user access to an IT application.
Which of the following does the recommendation represent?
- A . An agreed action adopted by management.
- B . A condition-based recommendation as an interim solution to correct a current condition.
- C . A cause-based recommendation to prevent inappropriate access being granted again.
- D . A management action plan.
C
Explanation:
A cause-based recommendation aims to address the root cause of an issue to prevent its recurrence. By recommending the removal of inappropriate user access, the audit report is identifying the underlying problem (the granting of inappropriate access) and suggesting a solution that will help prevent this issue from happening again. This type of recommendation is focused on mitigating risks by addressing their causes, thereby strengthening the control environment.
Reference: The Institute of Internal Auditors (IIA), Practice Guide on Writing Audit Reports "Internal Auditing: Assurance and Advisory Services" by Urton L. Anderson et al.
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?
- A . Infrastructure.
- B . Emerging.
- C . Managed.
- D . Initial.
According to the MA guidance, which of the following does the engagement work program test in a review of an organizational process?
- A . Process objectives.
- B . Process risks
- C . Process controls.
- D . Process scope