The chief audit executive was asked to define me internal audit activity s key performance indicators (KPIs) tor the upcoming year. The KPIs must measure efficiency and effectiveness. Which of the following is an example of a KPI that measures effectiveness?

Post engagement surveys completed by management indicate a 'meets or exceeds expectations' idling

Internal audit reports are consistently submitted prior to the audit report deadline

Post engagement surveys completed by management indicate a 'meets or exceeds expectations' idling

There is a significant reduction of travel costs per project over the next fiscal year

Internal auditors identify a minimum number of issues and provide recommendations to address them for each audit

An internal auditor was assigned to review controls in the accounts payable function. Most of tie accounts payable processes are performed by a third-party service provider. The auditor included in the audit report a number of control deficiencies involving processes performed by the service provider. The service provider requested a copy of the report Which of Vie following would be the most appropriate response from the chief audit executive (CAE)?

The CAE may distribute the report to tie service provider at no cost, after consulting with legal counsel and tie chief compliance officer

The CAE would automatically sand a copy of the report to the service provider as many of the findings relate to Via area managed by the service provider

The CAE may distribute the report to tie service provider at no cost, after consulting with legal counsel and tie chief compliance officer

The CAE may provide a copy of the audit report to the service provider If an agreement & signed and the service provider agrees to reimburse the cost of the audit D, The CAE should benchmark with other organization in the industry by consorting with colleagues and distribute the report only I it is an acceptable practice m the industry

As a result of server managements assumption of risk there is residual risk that exceeds me organisation's risk appetite. Which of the following actions would be most appropriate for the chief audit executive to take?

Communicate with the board the issue of residual risk

ignore the responsibility of addressing the residual risk

Assume the responsibility of addressing the residual risk

Ensure senior management acknowledges residual risk

Communicate with the board the issue of residual risk

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?

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

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

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

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

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

In which of the following ways can the internal audit activity new engagement opportunities?

By defining activities by business processes.

By looking external factors such as product complaints.

By looking at activities by businesses cost centers.

By defining activities by the organization chart.

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 lasts

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

An engagement work program o of greatest value to audit management when which of the following is true?

The work program helps ensure tie achievement of the engagement objectives

The work program provides more detailed support for the audit report

The work program helps determined the required amount of audit resources

The work program helps ensure tie achievement of the engagement objectives

The work program assists the auditor n developing and managing audit tests

According to IIA guidance, which of re following actions should the internal auditor take immediately after having considered fraud scenarios and identified and prioritized fraud risks?

Determine which controls if any are in place to mitigate the fraud risks

Follow protocol for internal reporting and investigating fraud allegations

Research frauds that nave occurred t\ similar organizations

Incorporate the fraud risk assessment into the engagement plan

Which of the following approaches would best help an internal auditor determine whether a retailer database of 100,000 customers has nay duplicate accounts?

Sorting the customer information

Stratifying the customer information

Extracting the customer information

Filtering the customer information

Sorting the customer information

A healthcare organization's chief audit executive (CAE) noted that the organization's IT team relies heavily on a vendor. Therefore an IT vendor assessment review was added to the annual audit plan. During the review, the audit team discovered that the vendor had not been performing proper monitoring to ensure that the subcontractors it hired comply with the organization requirements. The organization's chief information officer (ClO) does not agree with the audit team's recommendation for the IT team to monitor the compliance level of vendor subcontractors. How should the audit team proceed to resolve this situation?

Escalate the issue to the audit committee, as the CIO is unwilling to implement the recommended action plan.

Write a risk acceptance memo for the CIO to sign acknowledging the observation and indicating a willingness to accept the risk.

Provide an example of the attestation form that vendors must use. Then, recommend that the IT team require vendors to submit the attestation form on a regular basis.

Escalate the issue to the audit committee, as the CIO is unwilling to implement the recommended action plan.

Escalate the issue to the CAE to assess whether the ClO's reasoning is acceptable.

Which of the following attribute sampling methods would be most appropriate to use to measure the total misstatement posted to an accounts payable ledger?

Probability to proportional size sampling

Which of the following should be described in the recognition element of a typical internal audit repot?

A brief synopsis of the process of area under review

Positive aspects of the process or area under review

A brief synopsis of the process of area under review

Outcomes and ratings of the process or area under review

Report issuance and the communication process of the engagement.

Which of the following engagement supervision activities should be performed first?

Ensure that risks to the timely completion of the engagement are assessed

Ensure that internal audit recommendations are practical, cost-effective, and value-added

Ensure that internal audit conclusions am based on sufficient and reliable evidence

Ensure that risks to the timely completion of the engagement are assessed

Ensure that performance assessments are completed for audit team members

Which of the following would most likely prompt special notification from the chief audit executive to same management?

A controls inaccurate operation has materially impacted the accuracy of the poor year's financial statements

Operational management has decried to weigh an audit issue against the organization's risk tolerance

A controls inaccurate operation has materially impacted the accuracy of the poor year's financial statements

Occurrences of asset misappropriation have been identified as a result of an ineffective operational control design

The controls that management performed to confirm compliance with health and safety standards were not systematically documented

When a significant finding is noted early during a review of the accounts payable function, which next course of action is best for communicating the issue?

Intern accounting management via an interim memorandum update

Note the item in the workpapers for inclusion in the final audit report

Call a meeting and discuss me issue with the audit committee

Alert the CEO as soon as the issue is discovered

An internal auditor wanted to determine whether the organization's 200 employees are charging their work hours accurately to the correct project. The internal auditor selected a sample of 30 employee time reports for testing. Based on the testing, the internal auditor determined the following:- 5 Time reports were incorrect.- 21 Time reports were correct.- 4 Time reports were not supported.

The organization generally ensured that employee hours charged to each project were accurate and complete. However, there were instances of employee time reports that were incorrect or not supported to justify the multiple project labor coats

The organization has significant flaws in its reporting of employee time, which could lead to the overstatement of project labor costs. The organization's failure to report accurate and complete employee time could lead to potential fraud and abuse.

The organization needs to ensure that all reporting of employee time is accurate and complete for each of its projects By dang so the organization can minimize potential issues related to overstating employee tames and labor project costs.

The organization overstated project costs due to inaccurate and incomplete reporting of employee time charged to the affected accounts As a result the organization cannot ensure at protects costs are accurately reported to stakeholders

The organization generally ensured that employee hours charged to each project were accurate and complete. However, there were instances of employee time reports that were incorrect or not supported to justify the multiple project labor coats

The chief audit executive (CAF) determined that the residual risk identified in an assurance engagement is acceptable. When should this be communicated to senior management?

When the CAE reports the audit outcome to senior management.

When the residual risk is identified before the engagement is complete.

Immediately, as residual risk should be communicated as soon as possible

When management of the area under review has resolved and mitigated the residual risk

Which of the following information is most appropriate for the chief audit executive to share when coordinating audit plans with other internal and external assurance providers?

Objectives scope and timing at a high level to support coordination while adhering to confidentiality requirements

The area and timing of the audit engagement to ensure confidentially and avoid conflict of interest.

All plan information, including risk assessments, planned tests and past results to maximize the opportunity for coordination with internal and external providers.

No information should be shared with internal and external provider as it could introduce bias into the engagement results.

An internal auditor s testing tor proper authorization of contracts and finds that the rate of deviations discovered in the sample is equal to the tolerable deviation rate. When of the following is the most appropriate conclusion for the internal auditor to make based on this result?

The internal auditor concludes that the specified control is acceptably effective

The internal auditor concludes that management may be placing undue reliance on me specified control

The internal auditor concludes that the specified control is more effective than it really is.

The internal auditor concludes that the specified control is acceptably effective

The internal auditor concludes that additional testing will be required to evaluate the specified control

According to IIA guidance, which of the following would be considered necessary for a one-person audit function?

A memorandum stating policies and procedures

A formalized technical audit manual

A written administrative audit manual

A memorandum stating policies and procedures

A comprehensive policy and procedure manual

During the planning phase of an assurance engagement, an internal auditor seeks to gam an understanding of now when the area under review is accomplishing its objectives When of theFollowing information-gathering techniques is the auditor most likely to use?

A review of the key performance indicators of me area under review.

A walkthrough of the key processes of the area under review.

An interview with the manager regarding the area's business plan.

A review of previous audit and follow- up results of the area under review

What is the purpose of an internal control questionnaire?

To assess risks that could prevent an audited area from achieving its objectives.

To gather information from a sample of people who are geographically dispersed

To assess risks that could prevent an audited area from achieving its objectives.

To evaluate tie level of compliance of remote offices with centrally designed procedures

To perform testing of controls more frequently

An internal auditor is planning a consuming engagement and the objective is to identify opportunities to improve the efficiency of the organization's procurement process. The auditor is preparing to conduct a preliminary survey of the are a. Which of the following approaches would be most useful to obtain relevant information to support the engagement objective?

Review the procurement process map w*h employees who carry out key activities to obtain their input and insights.

Complete a transaction walkthrough fiat focuses on the design and operation of financial reporting controls

Conduct interviews with senior management to obtain their input and insights regarding operational controls.

Perform a comprehensive review of the organization s existing policies and standard operating procedures.

Review the procurement process map w*h employees who carry out key activities to obtain their input and insights.

Besides a chief audit executive's professional experience what determines the frequency and approach to assessing residual risk?

The expectations set by the board and senior management

The frequency of executing the internal audit engagements

The frequency of changes in the organization environment

The expectations set by the board and senior management

The expectations set by operating management and senior management

Upon the completion of an audit engagement an audit manager performs a review of a staff auditor's workpapers. Which of the following actions by the manager is the most appropriate this review''

Discuss the workpaper review results with the staff auditor where appropriate as a leaning opportunity

Communicate the workpaper review results to management of fie area under review to validate the final report

Update the final report in the file with any necessary corrections based on the workpaper review.

Discuss the workpaper review results with the staff auditor where appropriate as a leaning opportunity

Add the manager's review notes to the final documentation following the review

An internal auditor using the five-attribute approach to document deficiencies in a warehouse shipping process. Which of the following attributes will be included in the workpapers?

Condition, cause, effect, recommendation

Risk, impact likelihood existing control, recommendation

Condition, cause, effect, recommendation

Condition, cause effect test result

Risk, impact test result recommendation

Which of the following actives is an internal auditor most likely to perform when establishing the objectives of an assurance engagement?

Meet with operational management to team about any areas of concern and to agree on the engagement objectives

Discuss the internal audit risk assessment including applicable risks and objectives with internal audit management

Perform a walk-through of the process under review to determine whether control wore operating, effectively

Identify when controls will be tested and the sampling method to be used based on control risk

Meet with operational management to team about any areas of concern and to agree on the engagement objectives

An internal auditor has suspicions that the management of a department splits me number of planned purchases to avoid the approval process required for larger purchases. Which of the following would be the most efficient technique to help the auditor identify the seventy of this malpractice?

Examining the entire population

Asking management about the malpractice

Testing a sample of random transactions.

To compete in the global market, an organization is restructuring and consolidating many of its divisions. Prior to the consolidation, senior management requested assistance from tie internal audit activity. Which of the following consulting services would be most appropriate in this situation?

Advise division managers on how to streamline operations for better efficiency

Assess controls for potential compliance issues that may affect me consolidation

Brief vendors on the potential risks that will occur without continued business

Advise division managers on how to streamline operations for better efficiency

Determine whether the organization's controls are effective in meeting business objectives

Acceding to MA guidance, when of the Mowing strategies would like provide the most assurance to the chief audit executive (CAE) that the internal audit activity's recommendations are being acted upon?

The CAE develops a tracking system to monitor the stains of engagement recommendations reported to management for action

The CAF obtains a formal response from senior management regarding the corrective actions they plan to take w address the recommendations.

The CAE develops a tracking system to monitor the stains of engagement recommendations reported to management for action

The CAE communicates with impacted department managers to determine whether corrective actions have addressed engagement recommendations

The CAE works with the engagement supervisor to monitor the recommendations issued to management for corrective action

IIA IIA-CIA-Part2 Practice Test 6 - Free Online Exam Prep & Questions

Question 1 / 40

While planning for an accounts payable audit an internal auditor performs an entity level controls analysis. Which of the following statements is true regarding me approach used by the auditor?

It enables the auditor to identify the inherent risks to the effective operation of accounts payable process controls.

It enables the auditor to understand the framework of the activities and associated accounts payable subprocesses

it enables the auditor to understand the accounts payable process and its flow, including key steps and systems.

It enables the auditor to categorize the population of transactions within the accounts payable process

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IIA IIA-CIA-Part2 Practice Test 6

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