Practice Free IIA-CIA-Part2 Exam Online Questions
Question #41
According to IIA guidance, which of the following is least likely to be a key financial control in an organization’s accounts payable process?
- A . Require the approval of additions and changes to the vendor master listing, where the inherent risk of false vendors is high.
- B . Monitor amounts paid each period and compare them to the budget to identify potential issues.
- C . Compare employee addresses to vendor addresses to identify potential employee fraud.
- D . Monitor customer quality complaints compared to the prior period to identify vendor issues.
Correct Answer: D
Question #42
Senior IT management requests the internal audit activity to perform an audit of a complex IT are a. The chief audit executive (CAE) knows that the internal audit activity lacks the expertise to perform the engagement.
Which of the following is the most appropriate action for the CAE to take?
- A . Decline the audit engagement, because the Standards prohibit internal auditors from performing engagements where they lack the necessary competencies.
- B . Accept the audit engagement and use the engagement as an opportunity to develop the audit team’s IT expertise while performing the audit work.
- C . Temporarily hire an experienced and knowledgeable IT analyst from the organization’s IT department to lead the audit.
- D . Outsource the audit engagement to a reputable IT audit consulting firm.
Correct Answer: D
D
Explanation:
Step-by-Step Detailed Explanation
D
Explanation:
Step-by-Step Detailed Explanation
Question #43
Which of the following is the most important determinant of the objectives and scope of assurance engagements?
- A . The organizational chart, business objectives and policies and procedures of the area to be reviewed.
- B . The most recent risk assessment conducted by management of the area to be reviewed.
- C . The requests of operational and senior management throughout the organization.
- D . The preliminary risk assessment performed by internal auditors planning the engagement
Correct Answer: D
Question #44
According to IIA guidance, which of the following is true regarding the exit conference for an internal audit engagement?
- A . A primary purpose of the exit conference is to provide for the timely communication of observations that call for immediate management action.
- B . Both the chief audit executive and the chief executive over the activity or function reviewed must attend the exit conference to validate the findings.
- C . The exit conference provides only anticipated results for inclusion in the final audit communication.
- D . During the exit conference, the performance of the internal auditors who executed the engagement is reviewed.
Correct Answer: C
Question #45
Which of the following statements concerning workpapers is the most accurate?
- A . The organization and the format of workpapers is the same for all engagements
- B . The extent of what is included in workpapers is a matter of professional judgment
- C . Workpapers should be complete so that every conceivable question that can be raised should be answered
- D . Copies of operational managements records should not be included, but referenced so that they can be located
Correct Answer: D
Question #46
Senior management wants assurance that third-party contractors are following procedures as agreed with the organization.
Which type of audit would be most appropriate to achieve this objective?
- A . A compliance audit.
- B . A due diligence audit.
- C . A financial audit.
- D . An external audit.
Correct Answer: A
Question #47
If observed during fieldwork by an internal auditor, which of the following activities is least important to communicate formally to the chief audit executive?
- A . Acts that may endanger the health or safety of individuals.
- B . Acts that favor one party to the detriment of another.
- C . Acts that damage or have an adverse effect on the environment.
- D . Acts that conceal inappropriate activities in the organization.
Correct Answer: B
Question #47
If observed during fieldwork by an internal auditor, which of the following activities is least important to communicate formally to the chief audit executive?
- A . Acts that may endanger the health or safety of individuals.
- B . Acts that favor one party to the detriment of another.
- C . Acts that damage or have an adverse effect on the environment.
- D . Acts that conceal inappropriate activities in the organization.
Correct Answer: B
Question #49
Determine who will receive the final audit report.
- A . 1 and 2
- B . 1 and 4
- C . 2 and 3
- D . 3 and 4
Correct Answer: D
Question #50
Which of the following should the chief audit executive do when evaluating the possibility of relying on external auditors’ work?
- A . Perform comprehensive background checks on all independent auditors on the engagement.
- B . Recalculate all financial calculations to confirm competency.
- C . Examine objectivity and any perceived or actual conflicts of interest.
- D . Review audit tests employed in all previous audits.
Correct Answer: C
C
Explanation:
When the chief audit executive (CAE) evaluates the possibility of relying on external auditors’ work, the primary focus should be on examining the objectivity and any perceived or actual conflicts of interest that might affect the external auditors’ work. Ensuring that the external auditors are objective and free from conflicts is crucial for determining whether their work can be relied upon by the internal audit activity.
Detailed Explanation
IIA Standard 2050 C Coordination and Reliance:
This standard requires that the internal audit activity coordinates its efforts with external auditors to ensure proper coverage and minimize duplication of efforts. When relying on external auditors, the CAE must assess the external auditors’ objectivity and independence.
Objectivity and Conflicts of Interest:
Objectivity refers to the unbiased mental attitude that allows external auditors to perform their work with integrity and impartiality. Conflicts of interest, whether perceived or actual, can compromise this objectivity. The CAE needs to ensure that external auditors are free from any relationships or interests that could affect their judgment.
IIA Practice Advisory 2050-2:
The advisory suggests that the internal audit activity should evaluate the competence, objectivity,
and independence of external auditors before relying on their work. A thorough examination of potential conflicts of interest is essential to ensure that the reliance on their work is justified.
Why Not Other Options?
Option A (Perform comprehensive background checks): While background checks may be useful, the primary focus should be on objectivity and conflicts of interest.
Option B (Recalculate all financial calculations): This approach is excessive and unnecessary if the external auditors’ work can be relied upon.
Option D (Review audit tests in previous audits): While reviewing previous work is important, it does not address the key issue of objectivity and independence.
Conclusion: Option C is correct because the CAE must focus on ensuring that external auditors are objective and free from conflicts of interest, which is essential for relying on their work, in accordance with IIA standards.
C
Explanation:
When the chief audit executive (CAE) evaluates the possibility of relying on external auditors’ work, the primary focus should be on examining the objectivity and any perceived or actual conflicts of interest that might affect the external auditors’ work. Ensuring that the external auditors are objective and free from conflicts is crucial for determining whether their work can be relied upon by the internal audit activity.
Detailed Explanation
IIA Standard 2050 C Coordination and Reliance:
This standard requires that the internal audit activity coordinates its efforts with external auditors to ensure proper coverage and minimize duplication of efforts. When relying on external auditors, the CAE must assess the external auditors’ objectivity and independence.
Objectivity and Conflicts of Interest:
Objectivity refers to the unbiased mental attitude that allows external auditors to perform their work with integrity and impartiality. Conflicts of interest, whether perceived or actual, can compromise this objectivity. The CAE needs to ensure that external auditors are free from any relationships or interests that could affect their judgment.
IIA Practice Advisory 2050-2:
The advisory suggests that the internal audit activity should evaluate the competence, objectivity,
and independence of external auditors before relying on their work. A thorough examination of potential conflicts of interest is essential to ensure that the reliance on their work is justified.
Why Not Other Options?
Option A (Perform comprehensive background checks): While background checks may be useful, the primary focus should be on objectivity and conflicts of interest.
Option B (Recalculate all financial calculations): This approach is excessive and unnecessary if the external auditors’ work can be relied upon.
Option D (Review audit tests in previous audits): While reviewing previous work is important, it does not address the key issue of objectivity and independence.
Conclusion: Option C is correct because the CAE must focus on ensuring that external auditors are objective and free from conflicts of interest, which is essential for relying on their work, in accordance with IIA standards.