Which of the following would most Holy reflect the best possible engagement objectives?

Engagement objectives derived from risk assessment results from both senior management and the company's risk function experts

Engagement objectives derived from risk assessment results from a company's risk function experts.

Engagement objectives derived from senior management's risk assessment results

Engagement objectives derived from the mental audit activity's own risk assessment results

Engagement objectives derived from risk assessment results from both senior management and the company's risk function experts

The head of customer service asked the chief audit executive (CAE) whether eternal auditors could assist her staff with conducting a risk self-assessment in the customer service department. The CAE promised to meet with customer service managers analyze relevant business processes, and come up with a proposal. Who is most likely to be the final approver of the engagement objectives and scope?

Senior management of the organization

An internal auditor is conducting a preliminary survey of the investments area, and sends an internal control questionnaire to the management of the function. (An extract of the survey is provided below). 1. Are there any restrictions for any company's investments?2. Are there any written policies and procedures that document the flow of investment processing?3. Are investment purchases recorded in the general ledger on the date traded?4. Is the documentation easily accessible to an persons who need in to perform their job?Which of the following is a drawback of testing methods like this?

They are limited as there is a risk that management may not answer fairly.

They ore kitted as they do not allow the auditor to test many controls.

They do not highlight control gaps

They are not useful for identifying areas on which the auditor should locus.

They are limited as there is a risk that management may not answer fairly.

Internal control questionnaires are used to achieve which of the following objectives?

To determine whether specified contra procedures are in place

To ascertain the operating effectiveness of a procedure

To verify the accuracy of Information in a report

To assess the controls mitigating major risks

To determine whether specified contra procedures are in place

Acceding to IIA guidance, which of the following statements is true regarding the risk assessment process performed by the internal audit activity?

The analysis should begin with ne identification of objectives

The assessment of high-level risks is typically a linear process.

Management should create the preliminary risk matrix

The analysis should begin with ne identification of objectives

Likelihood should receive greater consideration than impact

According to IIA guidance, when would an interim report typically be produced?

During lengthy audit engagements involving several organizational units.

During a standard audit engagement when management wants to address an issue before the final report is drafted.

Following each workshop conducted during a consulting engagement.

During lengthy audit engagements involving several organizational units.

Following management's update tor actions taken on outstanding recommendations.

Acceding to IIA guidance, when of the Mowing is an assurance service commonly performed by the internal audit activity?

Validating whether employees are following established policies and procedures in the procurement department

Proposing fine item recommendation lot the annual financial budget of the accounting department

Making recommendations regarding financial approval authority limits for the operations department

Validating whether employees are following established policies and procedures in the procurement department

Generating expense report metrics for employees in the finance department

An internal auditor is preparing for an auditor of newly implemented software that is used by 3,000 employees in South America and Europe. What would be the best way for the auditor to gather relevant feedback?

Distribute surveys to software users in both regions

interview IT management in both regions

Inspect regional user software training records

Interview propel management and the vendor responsible for implementation

Distribute surveys to software users in both regions

An organization is expanding into a new line of business selling natural gas. The internal auditor is planning an engagement and wants to obtain a general understanding of the natural gas market the market share that the organization wants to win, and the competitive advantage that the organization may have. Which of the following would be the best source of such information?

Interview responsible managers and read strategic documents

Conduct internet searches on gas sales and analyze market players

Review gas clients' portfolio and compile statistics on sales margins

Analyze the organization's revenues and calculate the proportion of gas

During follow-up, the chief audit executive (CAE) is having a discussion with management about the internal audit team's recommendations related to a significant issue Management accepted the issue but took no remedial action What is the next step for the CAE?

The CAE should escalate the issue to senior management .

The CAE should reassess and validate the risk tolerance policy

The CAE should escalate the issue to senior management .

The CAE should reiterate the internal audit team's recommendations to management .

The CAE should grant management more time to implement the recommendation and check the status of the issue during the next scheduled follow-up.

While performing fieldwork for an assurance engagement, a member of the internal audit team identified a key control that was not identified during the planning phase of the engagement Which of the following actions by the internal auditor would be most appropriate?

Adjust the audit work program to account for the new control, but only with approval from the engagement supervisor

Promptly adjust the audit work program to include tests that address the newly identified control and notify the other audit team members of the change

Proceed with the current audit work program because the engagement scope has already been finalized but plan to address the newly identified control as part of the follow up engagement

Adjust the audit work program to account for the new control, but only with approval from the engagement supervisor

Discuss the control with management of the area under review and seek their approval prior to including the control in the current audit engagement

Which of the following internal audit procedures commonly involves sampling?

Confirmation and financial statement analysis

Trend analysis and benchmarking

A chief audit executive (CAE) following up on action plans from previously completed audits identifies that management has determined that certain action plans are no longer necessary If the CAE disagrees with management's decision, which of the following is the most appropriate next step for the CAE to take?

The CAE must discuss the matter with the board

The CAE must discuss the matter with senior management

The CAE must discuss the matter with key shareholders

The CAE must discuss the matter with legal counsel

The CAE must discuss the matter with the board

An internal auditor accessed accounts payable records and extracted data related to fuel purchased tor the organization's vehicles As a first step, she sorted the data by vehicle and used spreadsheet functions to identify all instances of refueling on the same or sequential dates She then performed other tests Based on the auditor's actions which of the following is most likely the objective of this engagement1?

To identify whether fuel was purchased for work-related purposes

To estimate future fuel costs for the organization's fleet of vehicles

To determine trends in average fuel consumption by vehicle

To determine whether the organization is paying more than the industry average for fuel

In which of the following populations would the internal auditor most likely choose to use a stratified sampling approach?

Revenue that is earned by an organization through cash receipts or as receivable.

Inventory comprised of the same items stored in different warehouses

Batches of materials that must be confirmed as meeting quality standards

Revenue that is earned by an organization through cash receipts or as receivable.

Tax reports submitted to meet the requirements of the local taxation authority

An internal audit team leader is having difficulties completing the planning phase of an assurance engagement because the business unit lacks a system of internal controls. Which of the following is the most appropriate course of action for the internal audit team leader?

Add a consulting component to the already scheduled assurance engagement

Defer the engagement until a system of internal control has been established

Change the scheduled engagement from assurance to consulting to help correct the shortcomings

Add a consulting component to the already scheduled assurance engagement

Seek the involvement of the external auditor to assist with improving the internal controls

The head of customer service asked the chief audit executive (CAE) whether internal auditors could assist her staff with conducting a risk self-assessment in the customer service department The CAE promised to meet with customer service managers analyze relevant business processes and come up with a proposal Who is most likely to be the final approver of the engagement objectives and scope?

Senior management of the organization

According to IIA guidance which of the following best describes reliable information?

Reliable information is factual adequate, and convincing so that a prudent informed person would reach the same conclusions as the internal auditor

Reliable information is the best attainable information through the use of appropriate engagement techniques

Reliable information supports engagement observations and recommendations and is consistent with the objectives for the engagement

Reliable information helps the organization and the internal audit activity meet its goals

Which of the following statements is true regarding the audit objective for an assurance engagement?

The audit objective must consider the possibility of fraud and noncompliance

Operational management must determine the audit objective in cooperation with the internal auditor

The audit objective may be adjusted after the start of an engagement and it does not need to align with the assessed risks

The audit objective must consider the possibility of fraud and noncompliance

The audit objective may or may not consider the possibility of fraud depending on the assessed likelihood and impact

Which of the following best exemplifies having effective risk management and internal control processes?

Relevant risk indicators and mitigation plans are in place

All risks are identified and assessed

Business profitability is likely to be achieved

Risk information is communicated to customers and suppliers

Which of the following best describes external benchmarking using trend analysis for a subsidiary of an international company?

Comparing common-size financial statements of the subsidiary with the averages of the industry for the last two periods

Comparing the current ratio of the subsidiary with the current ratio of another company for the same period

Comparing common-size financial statements of the subsidiary with the averages of the industry for the last two periods

Comparing the sales of the subsidiary with the sales of another subsidiary for the last two periods.

Comparing the sales of the subsidiary with the budgeted figures for the last two periods

An internal auditor discovered that sales contracts with business clients were not stored in the electronic document management database instead they were scanned and saved in a nonsystematic manner to server folders Which of the following would be an appropriate consequence for the internal auditor to include in the documented observation?

if the organization becomes subject to litigation the agreed pricing terms and conditions of the contracts may be difficult to prove

The document management policy requires business client data to be stored in a specific management database

Sales contracts were stored improperly because the office manager was not trained to use the electronic database and prefers to avoid it

if the organization becomes subject to litigation the agreed pricing terms and conditions of the contracts may be difficult to prove

All staff should be appropriately trained and required to follow the organization's established policies and procedures pertaining to document management

The audit committee has asked the chief audit executive (CAE) to conduct an ad hoc forensic investigation of the purchasing department within a month due to the significance and urgency of a recently discovered risk The internal audit activity currently has no available staff with relevant experience or qualifications Which of the following is the CAE's best option for fulfilling the internal audit activity's responsibilities in this case?

Outsource the investigation to independent professional consultants

Select certain internal auditors and remove them from their current assignments so that they can begin a forensic investigation course

Recruit additional internal auditors possessing relevant qualification and experience

Decline the engagement at this time

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

While conducting a review of the logistics department the internal audit team identified a crucial control weakness. The chief audit executive (CAE) decided to prepare an audit memorandum for management of the logistics department followed by an informal meeting What is the most likely reason the CAE decided to prepare the audit memorandum?

To allow management to address the identified weakness timely

To report up-to-date audit progress to management

To ensure that the internal audit team and the CAE are aligned with regard to the identified weakness

To allow management to address the identified weakness timely

To obtain management's agreement with regard to the identified weakness

Which of the following is one of the five attributes that internal auditors include when documenting a deficiency?

The criteria used to make the evaluation

The methodology used to analyze data

The proposed follow-up engagement work to be performed

The scope of work performed during the engagement

In the following risk control map risks have been categorized based on the level of significance and the associated level of control. Which of the following statements is true regarding Risk C?

The level of control is inadequate given the level of risk

The level of control is appropriate given the level of risk

The level of control is excessive given the level of risk

The level of control is inadequate given the level of risk

There is not enough of information to determine whether the controls are appropriate or not

In which of the following situations has an internal audit of obtained physical evidence?

An internal auditor made purchases from several of the organization's retail outlets to evaluate customer service

An internal auditor interviewed various employees regarding health and safety issues and recorded their answers

An internal auditor obtained the current quarterly financial report and computed changes in deb-to-equity ratio

An internal auditor received a signed confirmation regarding the terms of a transaction from an independent attorney

Which of the following is an appropriate documentation of proper engagement supervision?

A completed engagement workpaper review checklist.

The supervisor's review notes on engagement workpapers.

The email exchanges between the audit team and the supervisor.

A supervisor's approval of resources allocated to the engagement

An internal auditor discovered that a new employee was granted inappropriate access to the payroll system Apparently the IT specialist had made a mistake and granted access to the wrong new employee. Which of the following management actions would be most effective to prevent a similar issue from occurring again?

Provide coaching to the IT specialist and introduce a secondary control to ensure system access is granted in accordance with the approved access request.

Remove the new employee's excessive access rights and request that he report any future access error.

Perform a complete review of all users who have access to the payroll system lo determine whether there are additional employees who were granted inappropriate access

Review the system activity log of the employee to determine whether he used the inappropriate access to conduct any unauthorized activities in the payroll system

Provide coaching to the IT specialist and introduce a secondary control to ensure system access is granted in accordance with the approved access request.

The audit manager asked the internal auditor to perform additional testing because several irregularities were found in the financial information. Which of the following would be the most appropriate analytical review for the auditor to perform?

Compare the firm's financial performance with organizations in the same industry

Interview all managers involved in preparing the financial statements

Perform a bank reconciliation to confirm the cash balance in the financial statements.

Trace each financial transaction to the original supporting document

Management requested internal audit consulting services. During fieldwork significant control issues were identified by the internal audit team. Which of the following is an appropriate response from the chief audit executive?

Report the significant control issues to senior management and the board and recommend corrective action

End the consulting engagement and report the results to management as planned

Report the significant control issues to senior management and the board and recommend corrective action

Mutually agree with the engagement client on corrective actions

Focus on the consulting engagement and schedule an assurance engagement next to address the control issues

Which of the following factors would be the most critical in determining which engagements should be included in the annual internal audit plan?

The organization's annual risk management strategy

Whether an audit is explicitly required by the internal audit charter

The extent to which the work to be performed is an assurance or consulting engagement

The organization's annual risk management strategy

Risks that are identified by operations staff or senior management

IIA IIA-CIA-Part2 Practice Test 8 - Free Online Exam Prep & Questions

Question 1 / 40

Which of the following statements is true regarding the chief audit executive's (CAT$) responsibilities after completing an assurance or consulting engagement?

The CAE must establish a follow-up process tor both assurance and consulting engagements to monitor that management actions have been effectively implemented to address observations

The CAE must communicate the results of assurance and consulting engagements lo whoever can ensure that the results are given due consideration.

The CAE must acknowledge satisfactory performance when communicating the results of assurance and consulting engagements

The CAE may delegate the responsibility for communicating the results of consulting engagements although this responsibility cannot be delegated for assurance engagements

Comment (0)

IIA IIA-CIA-Part2 Practice Test 8

Question

IIA IIA-CIA-Part2 Practice Tests

Practice Tests