100% Real & Accurate IIA-CIA-Part2 Questions and Answers with Free and Fast Updates [Q20-Q36]

NO.20 An organization has recently incurred significant cost overruns on one of its construction projects. Management suspects that these overruns were caused by the contractor improperly charging for costs related to contract change orders. Which of the following procedures are appropriate for testing this suspicion?
1. Determine if the contractor has received proper approval of change orders from management.
2. Determine if the contractor has billed for original contract work cancelled by the change orders.
3. Determine if the contractor has charged change orders with costs already billed to the original contract.
4. Determine if the contractor has been paid for change orders that have not yet been completed.

1 and 2 only

1 and 3 only

2 and 3 only

3 and 4 only

NO.21 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?

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.

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 B.

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.

The relative ranking of the departments in order of their risk, from greatest to least risk, is: A; C; B.

NO.22 Which of the following is the most appropriate step for the chief audit executive to take in order to avoid defamation of character of the principal suspect in a fraud investigation?

Restrict the use of potentially damaging words to privileged reports or discussions.

Label all workpapers, reports, and correspondence of the internal audit activity as private.

Restrict discussions of the fraud to members of management who express an interest in the investigation.

Destroy all investigation workpapers and reports if the fraud cannot be proven.

NO.23 Which of the following statements is true regarding internal auditors and other assurance providers?

Assurance providers who report to management and/or are part of management cannot provide control serf-assessments services

Internal auditors should always reperform and validate audit work completed by external assurance providers

Internal auditors may rely on the work of internal compliance teams to expand their coverage of the organization without increasing direct audit

hours Internal auditors can rely on the work of other assurance providers only rf the other assurance providers report directly to the board

NO.24 Which of the following actions is related to the preliminary survey process?

Determining if controls are effective.

Preparing the engagement work program.

Identifying the current controls.

Completing a detailed test of controls.

NO.25 A manager of one of a retailer’s several retail outlets is stealing cash from cash sales, recording the sales as accounts receivable, and subsequently writing off the fictitious accounts receivable as bad debts. Which of the following comparisons would be most effective in signaling the possibility of such a fraud?

Bad debt expense as a percentage of sales, compared to that of the other outlets.

Bad debt expense as a percentage of sales, compared to that of previous years.

Percentage of past-due accounts receivable, compared to that of the other outlets.

Percentage of past-due accounts receivable, compared to that of previous years.

NO.26 Which of the following procedures would provide the best evidence of the effectiveness of a credit-granting function?

Observe the process.

Review the trend in receivables write-offs.

Ask the credit manager about the effectiveness of the function.

Check for evidence of credit approval on a sample of customer orders.

NO.27 According to IIA guidance, which of the following statements are true regarding the internal audit plan?
1. The audit plan is based on an assessment of risks to the organization.
2. The audit plan is designed to determine the effectiveness of the organization’s risk management process.
3. The audit plan is developed by senior management of the organization.
4. The audit plan is aligned with the organization’s goals.

1 and 2 only

3 and 4 only

1, 2, and 4

1, 3, and 4

NO.28 Which of the following factors could interfere with effective problem solving by an internal auditor?
I. Reacting to previous experiences with clients.
II. Focusing only on the most likely cause.
III.
Correcting the symptoms of problems.

I only

III only

I and II only

I, II, and III

NO.29 Which of the following statements is true regarding a drawback of using internal control questionnaires (ICQs)?

When internal auditors need to cover many control procedures using ICQs is generally less efficient than conducting observations and inspections

It is generally difficult for internal auditors lo compile appropriate ICQs for business activities that are governed by standardized operating procedures

ICQs are inadequate to provide effective assurance on how organizational processes are executed in practice.

It is generally difficult for internal auditors to process completed questionnaires, because ICQs frequently elicit detailed comments and long answers from management

NO.30 The chief audit executive established an internal audit activity (IAA) performance standard requiring all audit reports to be issued within 48 hours of the exit meeting with the client. Which of the following describes an exit meeting strategy that would best help the IAA meet this performance standard?

The objective of the exit meeting is to reach agreement on audit observations.

The objective of the exit meeting is to solicit action plans for audit observations.

The objective of the exit meeting is to confirm final details of fieldwork.

The objective of the exit meeting is to confirm understanding of audit results

NO.31 An organization’s internal audit plan includes a recurring assurance review of the human resources (HR) department. Which of the following statements is true regarding preliminary communication between the auditor in charge (AIC) and the HR department?
1. The AIC should notify HR management when the draft audit plan is being developed, as a courtesy.
2. The AIC should notify HR management before the planning stage begins.
3. The AIC should schedule formal status meetings with HR management at the start of the engagement.
4. The AIC should finalize the scope of the engagement before communicating with HR management.

1 and 3

1 and 4

2 and 3

2 and 4

NO.32 If participants in a control self-assessment workshop begin breaking their agreed-upon ground rules, the facilitator should:

Ignore the behavior and continue the workshop.

Allow them to continue briefly and then remind them of the ground rules.

Have the participants modify the ground rules.

Strictly enforce the ground rules.

NO.33 When addressing the excessive overtime being paid lo employees in an organization’s customer service call center, which of the following would be most relevant for the internal auditor to use?
1 Confirmation.
2. Trend analysis.
3 External benchmarking
4. Internal benchmarking

1.2 and 3

1.2. and 4.

1.3. and 4.

2. 3. and 4.

NO.34 Which of the following is a responsibility of the internal auditor once a fraud investigation has been concluded?

Ascertain the extent to which fraud has been perpetrated.

Notify the appropriate regulatory authorities regarding the outcome of the investigation.

Determine if controls need to be implemented or strengthened to reduce future vulnerability.

Implement controls to prevent future occurrences.

NO.35 Under what circumstances would internal audit not become involved when intentional misconduct is suspected?

Management is involved in wrongdoing.

Management is running a parallel investigation.

Management does not believe a trusted employee could be guilty.

Management does not maintain strong internal controls.

NO.36 The chief audit executive (CAE) notes that management has adopted the option of not taking action on an audit issue involving a sizeable risk which has been accepted in the past. Which would be an appropriate action by the CAE?

Close the issue by noting that follow-up will be completed as part of the next engagement.

Discuss the matter with management to determine a resolution.

Accept management’s decision as the same risk has been accepted in the past.

Report the situation to the board for immediate resolution.

100% Real & Accurate IIA-CIA-Part2 Questions and Answers with Free and Fast Updates [Q20-Q36]

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