A bakery chain has a statistical model that can be used to predict daily sales at individual stores based on a direct relationship to the cost of ingredients used and an inverse relationship to rainy days. What conditions would an auditor look for as an indicator of employee theft of food from a specific store?

On a rainy day, total sales are greater than expected when compared to the cost of ingredients used.

On a sunny day, total sales are less than expected when compared to the cost of ingredients used.

Both total sales and cost of ingredients used are greater than expected.

Both total sales and cost of ingredients used are less than expected.

An internal auditor has discovered that duplicate payments were made to one vendor. Management has recouped the duplicate payments as a corrective action. Which of the following describes management's action in this case?

A root cause-based action plan.

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?

Fraud detection techniques should be performed against full data populations.

The data from various sources should remain segregated for easier analysis and discovery of anomalies.

Fraud detection techniques should be performed against full data populations.

A reactive approach is best suited for fraud detection due to the effectiveness of tips and whistleblowing programs.

Random sampling is an effective method of detecting fraudulent transactions.

Which of the following offers the best explanation of why the auditor in charge would assign a junior auditor to complete a complex part of the audit engagement?

The auditor in charge believes that the junior auditor should obtain a specific type of experience.

The senior auditors are unavailable, as they are currently working on other portions of the engagement.

The auditor in charge believes that the junior auditor should obtain a specific type of experience.

The audit engagement has a tight deadline and the work must be completed timely.

The auditor in charge is unable to identify audit staff with all of the required skills needed to complete the engagement.

Which of the following sources of audit evidence is most reliable?

Timely audit evidence obtained directly from a customer.

Evidence obtained directly from an untested third party.

Uncorroborated audit evidence obtained indirectly from an employee.

Undocumented audit evidence obtained directly from a manager.

Timely audit evidence obtained directly from a customer.

Which of the following would most likely form part of the engagement scope?

Wire transfers that exceeded $10,000 in the last 12 months will be analyzed.

Potential legislation on privacy topics will be employed as a compliance target.

Wire transfers that exceeded $10,000 in the last 12 months will be analyzed.

Both random and judgmental samplings will be used during the engagement.

The probability of significant errors will be considered via risk assessment.

According to IIA guidance, which of the following should be a primary objective for an internal auditor who is conducting an exit conference?

Ensure the accuracy of engagement conclusions.

Improve relations with the engagement clients.

Present the final engagement communication.

Identify concerns for future audit engagements.

Ensure the accuracy of engagement conclusions.

Which of the following actions is the most appropriate response for an internal auditor to take when a significant risk is identified during a consulting engagement?

Report the risk identified from the consulting engagement to senior management.

Do not include the risk in the assessment of risk management processes, as that is management's responsibility.

Do not report the risk, as it is out of scope for the consulting engagement.

Include the risk identified from the consulting engagement in the next annual risk assessment only if it is part of the consulting engagement objectives.

Which of the following is a true statement regarding the use of flowcharts as an audit tool?

Flowcharts are best applied to linear process flows but cannot address all risks related to the process.

Flowcharts are typically not well suited to support information provided by a risk and control matrix.

Flowcharts are preferred to narratives, as they can provide much greater detail on the design and operation of a process.

Flowcharts are best applied to linear process flows but cannot address all risks related to the process.

Flowcharts describe process steps but cannot provide the level of detail needed to adequately assess the design of the process.

The audit plan requires a review of the testing procedures used in pre-production of a large information system prior to its live launch. If the chief audit executive (CAE) is uncertain that the current audit team has all the required knowledge to conduct the engagement, which of the following would be the most appropriate course of action for the CAE to take to preserve independence?

Make use of an external service provider.

Contract with the software vendor to provide an appropriate resource.

Ask for a knowledgeable resource from the IT department.

Make use of an external service provider.

Request audit resources through the external auditor.

Which of the following is an example of a properly supervised engagement?

The auditor in charge provides reasonable assurance that engagement objectives were met.

Auditors are asked to keep a daily record of their activity for review by the auditor in charge following the engagement.

The senior internal auditor requires each auditor to review and initial colleagues' workpapers for completeness and format.

A new internal auditor is accompanied by an experienced auditor during a highly sensitive fraud investigation.

The auditor in charge provides reasonable assurance that engagement objectives were met.

An internal auditor reviewed bank reconciliations prepared by management of the area under review. The auditor noted that the bank statements attached did not have the bank heading, logo, or address. Which of the following statements is true regarding this situation?

The evidence may not be reliable.

The evidence may not be sufficient.

The information missing is not relevant to the audit.

Which of the following would be most likely found in an internal audit procedures manual?

The extent of the auditor's authority to collect data from management.

A summary of the strategic plan of the area under review.

Appropriate response options for when findings are disputed by management.

An explanation of the resources needed for each engagement.

The extent of the auditor's authority to collect data from management.

According to IIA guidance, which of the following statements is true regarding audit workpapers?

Audit workpaper preparation contributes to the professional development of the internal audit staff.

Review notes on audit workpapers must be retained to provide a record of questions raised by the reviewer.

Audit workpaper documentation policies are reviewed and approved by the audit committee.

Management of the department being audited should review the prepared workpapers for accuracy.

Audit workpaper preparation contributes to the professional development of the internal audit staff.

According to IIA guidance, which of the following statements about analytical procedures is true?

Analytical procedures compare information against expectations.

Analytical procedures begin after the engagement's planning phase.

Analytical procedures provide internal auditors with explainable results.

Analytical procedures are computer-assisted audit techniques.

Which type of engagement would be the most appropriate to assess the maturity and rigor of the organizationwide risk management process of a target entity that management is considering acquiring?

An operational audit engagement.

A feasibility study engagement.

A risk and control self-assessment engagement.

Below is a flowchart detailing an organization's bank reconciliation process. Which of the following conclusions can be drawn from the flowchart?

There is an appropriate segregation of duties in the treasury department during the bank reconciliation process.

There is a conflict in the segregation of duties between preparing bank reconciliations and posting payments to the accounting books.

There is an appropriate segregation of duties in the treasury department during the bank reconciliation process.

There is a large workload for the treasury accountant during the bank reconciliation process.

Bank statements should be obtained at a higher level, such as through the treasury supervisor.

Upon completing a follow-up audit engagement, the chief audit executive (CAE) noted that management has not implemented any mitigation measures to address the high risks that were reported in the initial audit report. What initial step must the CAE take to address this situation?

Discuss the issue with members of management responsible for the risk area.

Communicate the issue to senior management.

Discuss the issue with members of management responsible for the risk area.

Report the situation to the external auditors.

Escalate the issue to the board.

During a review of the organization's waste management processes, the internal auditor discovered that wastewater is being disposed of inappropriately. The auditor's recommendations, suggested to mitigate the risk of regulatory sanctions and reputational damages, were accepted and timelines for implementation were agreed. However, during the internal audit activity's periodic follow-up exercise, management indicated that the recommendation was too expensive to implement and the current disposal method has been cost-effective. What should the chief audit executive do in this case?

Convene a meeting with senior management and discuss the issue and the potential impact it may have on the organization.

Nothing, as the internal audit activity has fulfilled its responsibility of providing recommendations to mitigate the risks to which the organization is exposed.

Contact the regulatory agency responsible for monitoring such matters in order to convince management to implement the recommendations.

Convene a meeting with senior management and discuss the issue and the potential impact it may have on the organization.

Highlight the current exposure to the external auditors so they too can highlight the issue and further pressure management to address the concern.

Which phase of an audit engagement is typically the most effective time for an internal auditor to develop a risk and control matrix?

At planning, to assist in developing the engagement work program.

When preparing to recap audit test results.

At sample selection, to determine sampling methodology.

At the start of fieldwork, as part of developing the annual audit plan.

At planning, to assist in developing the engagement work program.

The internal audit activity has requested that new vendor information be summarized once per week in a single report, and that all invoices each week for these vendors be automatically flagged in the invoice processing system. Which of the following computerized audit techniques is the internal audit activity most likely applying?

Employing generalized audit software.

Facilitating electronic workpapers.

Which of the following is critical to the success of an effective interview?

Establish credibility, trust, and rapport.

Present audit evidence and information to support the internal auditor's line of questioning.

Establish credibility, trust, and rapport.

Develop flowcharts and review them with the interviewee.

Observe the process and discuss it with the interviewee.

Which of the following is essential for ensuring that the internal audit activity's findings and recommendations receive adequate consideration?

Providing formal follow-up procedures to ensure that management complies with an action plan or accepted risk of not taking action.

Reporting results of audits with recommendations to management.

Providing formal follow-up procedures to ensure that management complies with an action plan or accepted risk of not taking action.

Reporting quarterly to management that the audit plan is focused on higher exposures of risk.

Discussing audit findings with independent auditors.

According to IIA guidance, which of the following activities are typically primary objectives of engagement supervision?

Identify engagement objectives, assign responsibilities to individual auditors, and approve the engagement program.

Enable training and development of staff, identify engagement objectives, and assign responsibilities to individual auditors.

Identify engagement objectives, assign responsibilities to individual auditors, and approve the engagement program.

Assign responsibilities to individual auditors, approve the engagement program, and enable training and development of staff.

Approve the engagement program, enable training and development of staff, and identify engagement objectives.

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?

To obtain sufficient audit evidence.

To test the client's knowledge.

To agree on the auditor's scope of authority.

An internal audit activity has to confirm the validity of the activities reported by a grantee that received a charitable contribution from the organization. Which of the following methods would best help meet this objective?

Visiting the grantee to assess whether the execution of the project was in line with the defined grant scope.

Verifying that the grantee's final report is in line with what was depicted in the initial budget request.

Reconciling general ledger accounts used by management of the area under review for reflecting expenses on charitable contributions.

Interviewing employees of the corporate affairs department, which is responsible for charitable activities.

An examination of the accounts payable function evidenced multiple findings with respect to segregation of duties. After management's response and action plan are received and documented in the final report, which of the following is most appropriate?

Follow up after the applicable changes have been incorporated to validate management's response.

Include the items in the scope of the next scheduled audit of the accounts payable function.

Because management agreed with the findings, no further action is deemed necessary.

Have an internal audit staff member placed into the accounting department until corrections are made.

Internal auditors map a process by documenting the steps in the process, which provides a framework for understanding. Which of the following is a reason to use narrative memoranda?

To create a detailed risk assessment.

To identify individuals who perform key roles.

To document which outputs support other activities.

IIA IIA-CIA-Part2 Practice Test 11 - Free Online Exam Prep & Questions

Which of the following is most likely the subject of a periodic report from the chief audit executive to the board?

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IIA IIA-CIA-Part2 Practice Test 11

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