During a previous audit engagement, an internal auditor recommended that management implement a whistleblowing process. During follow-up, the auditor discovered that the process has been outsourced. Which of the following is the most appropriate response for the internal auditor?

Review the agreement with the third-party service provider and ensure that appropriate controls are in place.

Insist on establishing an internal whistleblowing process, as originally recommended, because this is a key control.

Review the agreement with the third-party service provider and ensure that appropriate controls are in place.

Raise the issue to a higher level of management, as outsourcing the process was not previously discussed or agreed upon.

Take no action, as management has accepted the risk of moving to a third party for this whistleblowing process.

An internal auditor selects a sample of paid invoices and matches them to receiving reports. What is the most likely purpose for this procedure?

To ensure invoices are only paid for goods received.

To ensure all customer shipments are billed appropriately.

To ensure invoices are only paid for goods received.

To ensure all liabilities have been satisfied.

To ensure invoices are only paid for goods ordered.

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?

Performing a reasonableness test.

Conducting a fraud investigation.

Operating with impaired objectivity.

While reviewing the organization's financial year-end processes, an internal auditor discovered an erroneous journal entry. If the error is not addressed, it will result in a material misstatement of the financial records. The internal auditor needs an additional four weeks to complete the audit engagement. How should the auditor communicate this finding?

The auditor should discuss the finding with the appropriate accounting staff who can make the correction immediately, and if corrected before the engagement is concluded, the finding would not need to be included in the audit report.

The auditor should issue an interim report to management prior to completion of the audit and issuance of the final report.

The auditor should include this item in the final audit report, marked with an asterisk, indicating that it is a high-risk item.

The auditor should discuss the finding with the appropriate accounting staff who can make the correction immediately, and if corrected before the engagement is concluded, the finding would not need to be included in the audit report.

The auditor is obligated to bypass management and immediately report the error directly to regulatory authorities.

The internal audit activity of an insurance company is reviewing six of the company's 11 branches. During the review of the fourth branch that was selected, the internal audit team discovered control breaches that could result in regulatory sanctions if not addressed. How should the internal audit team proceed?

Have a discussion with branch management on the matter and recommend in an interim audit report that management take appropriate corrective action in order to address the current identified issues.

Communicate immediately to the relevant regulatory agency the information regarding the company's control breaches along with details of recommended corrective actions to address the issue.

Complete the branch reviews, ensure that the issue and impact are adequately detailed in the audit report, hold an exit meeting to discuss the issue with branch management, and provide recommendations for corrective actions.

Have a discussion with branch management on the matter and recommend in an interim audit report that management take appropriate corrective action in order to address the current identified issues.

Expand the audit to include the branches that were not previously selected and determine whether there are similar control breaches at those branches prior to compiling a comprehensive audit report and reporting the issue to senior management and the board.

An internal auditor at a bank informed the branch manager of a malfunctioning lock on one of the vaults. The risk associated with this issue was deemed significant by the chief audit executive (CAE), and immediate remediation was recommended. However, during a follow-up engagement, the branch manager told the CAE that the risk was actually not significant, hence no action was taken. What is the most appropriate next step for the CAE?

Inform senior management that the branch manager decided to cancel the committed action plan without any previous communication.

Discuss the issue with the board, which has ultimate responsibility to resolve this risk.

Have another discussion with the branch manager, attempt to change his view, and encourage him to implement the recommendations.

Document the branch manager's decision to accept the risk; otherwise, no other specific course of action is required.

Which of the following statements is true regarding internal controls?

Poorly designed or deficient entity-level controls can prevent well-designed process controls from working as intended.

For assurance engagements, internal auditors should plan to assess the effectiveness of all entity-level controls.

Poorly designed or deficient entity-level controls can prevent well-designed process controls from working as intended.

During engagement planning, internal auditors should not discuss the identified key risks and controls with management of the area under review, to prevent tipping off probable audit tests.

Reviewing process maps and flowcharts is an appropriate method for the internal auditor to identify all key risks and controls during engagement planning.

Which of the following is an example of a compliance assurance engagement?

Providing an assessment of the design adequacy of controls related to consumer privacy and confidentiality.

Providing in-house training to senior management regarding applicable laws and regulations.

Providing an assessment of the design adequacy of controls related to consumer privacy and confidentiality.

Providing an assessment of customer satisfaction with customer service provided by the organization.

Providing testing on the operating effectiveness of controls over the reliability of financial reporting.

Which of the following would offer the strongest evidence to support the internal auditor's conclusion that a product is in stock, as stated in the accounting records?

The auditor performs an observation.

The vendor provides third-party confirmation.

The auditor documents interviews with multiple warehouse personnel.

Warehouse management submits photographs of the product on the inventory shelf.

IIA IIA-CIA-Part2 Practice Test 13 - Free Online Exam Prep & Questions

The internal audit manager has been delegated the task of preparing the annual internal audit plan for the forthcoming fiscal year. All engagements should be appropriately categorized and presented to the chief audit executive for review. Which of the following would most likely be classified as a consulting engagement?

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IIA IIA-CIA-Part2 Practice Test 13

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