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IIA IIA-CIA-Part2 Practice Test - Questions Answers, Page 13
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Question 121
Which of the following should be the focus of the effect section of the preliminary observations document?
Explanation:
The focus of the effect section of the preliminary observations document should be on residual risk. Residual risk is the remaining risk after management has taken action to mitigate the inherent risk with controls and other risk responses. Documenting the effect in terms of residual risk helps in understanding the potential impact of the observed issues on the organization if not addressed.
IIA Standards: 2310 - Identifying Information
IIA Practice Guide: Communicating the Results of an Audit
Question 122
An internal auditor is assigned to validate calculations on the organization's building application As pad of the test the internal auditor is required to use an automated audit tool to simulate transactions for testing. Which of the following would most appropriately be used for this purpose?
Explanation:
Generalized audit software (GAS) is a type of automated audit tool commonly used by internal auditors to perform a wide range of audit tests, including the validation of calculations and the simulation of transactions. GAS allows auditors to analyze large volumes of data, perform complex calculations, and create simulations to test the accuracy and completeness of the transactions. This makes it the most appropriate tool for validating calculations in the organization's building application.
Reference:
The IIA's Global Technology Audit Guide (GTAG) on Data Analytics and Generalized Audit Software.
Question 123
Which of the following statements about assurance maps is correct?
Explanation:
An assurance map is a tool used by the chief audit executive (CAE) to provide a visual representation of the assurance activities performed by various assurance providers within the organization, including internal audit, compliance, risk management, and external auditors. It helps in identifying areas of overlap, gaps in assurance coverage, and ensuring efficient and effective coordination among different assurance providers.
Reference:
The IIA's Practice Guide on Coordinating Risk Management and Assurance.
Question 124
The chief audit executive (CAE) for a manufacturing company included in this year s audit plan a review of the company's laboratory, using an experienced external service provider. The audit plan was approved by the audit committee without any changes At the time of engaging the external service provider, the CAE also secured the approval from the CEO. Who is responsible for ensuring that the conclusions reached for this exercise are adequately supported7
Explanation:
The chief audit executive (CAE) is responsible for ensuring that the conclusions reached by the external service provider are adequately supported. While the audit committee approves the audit plan and the CEO may approve the engagement of external service providers, it is the CAE's responsibility to oversee the entire audit process, including the quality and substantiation of the conclusions and recommendations made by the external auditors.
Reference:
The IIA's International Standards for the Professional Practice of Internal Auditing (Standards), specifically Standard 1312 - External Assessments.
The IIA's Practice Guide on Outsourcing and Cosourcing of Internal Audit Activities.
Question 125
Which of the following is most likely to be judged as a significant residual risk that would exceed the organization's acceptable risk level?
Explanation:
A significant residual risk that would exceed the organization's acceptable risk level is likely to be one that has severe consequences, such as causing injuries or environmental pollution. These types of risks can have substantial legal, financial, and reputational impacts on an organization and are typically beyond acceptable levels of risk tolerance.
Reference:
COSO's Enterprise Risk Management -- Integrating with Strategy and Performance.
The IIA's Practice Guide on Risk Management.
Question 126
An internal auditor is testing the success of the IT support department in meeting the service levels guaranteed to small, medium and large customers. The customer's size classification is based on its annual expenditures with the organization and the nature and extent of services it receives. Which of the following sampling techniques would be the most suitable to select customers for this test?
Explanation:
Stratified sampling is the most suitable technique for selecting customers for testing the IT support department's success in meeting service levels, as it involves dividing the population into distinct subgroups (strata) based on certain characteristics (in this case, customer size classification based on annual expenditures and service nature). This method ensures that each subgroup is adequately represented in the sample, providing more reliable and relevant results.
Reference:
The IIA's Global Technology Audit Guide (GTAG) on Data Analysis Technologies.
The IIA's Practice Guide on Audit Sampling.
Question 127
An audit observation noted that annual inventory counts of biofuel was not being performed appropriately Fuel yards were not visited and physical amounts of biofuel were not reconciled with accounting data Management of the division understood the issue and promised to resolve the problem When should the internal auditor schedule a follow-up review?
Explanation:
Strategic sourcing would best assist the CAE in balancing the internal audit activity's needs for technical audit skills, budget efficiency, and staff development opportunities. Strategic sourcing involves using a mix of internal resources, co-sourcing, and outsourcing to optimize the audit function. This approach allows the CAE to leverage external expertise for specialized skills, manage costs effectively, and provide growth opportunities for internal staff.
IIA Standards: 2030 - Resource Management
IIA Practice Guide: Developing the Internal Audit Strategic Plan
Question 128
A chief audit executive (CAE) is trying to balance the internal audit activity's needs for technical audit skills budget efficiency and staff development opportunities. Which of the following would best assist the CAE in achieving this balance1?
Explanation:
When an internal auditor receives a document displaying all the steps of a process and the path taken as transactions flow between each step, the auditor is most likely to use this document to perform an assessment of the adequacy of process controls. This flowchart or process map helps the auditor understand the process, identify key control points, and evaluate whether the existing controls are sufficient to mitigate risks within the process.
IIA Standards: 2201 - Planning the Engagement
IIA Practice Guide: Internal Auditing and Fraud
Question 129
An internal auditor receives a document displaying all the steps of a process and the path taken as transactions flow between each step of the process How is the internal auditor most likely to use This document during the engagement?
Question 130
An internal auditor is asked to review a recently completed renovation to a retail outlet. Which of the following would provide the most reliable evidence that the completed work conformed to the plan?
Explanation:
A physical inspection of the retail outlet would provide the most reliable evidence that the completed renovation work conformed to the plan. This method allows the auditor to directly observe the completed work and compare it with the original plans and specifications, ensuring that the renovation meets the required standards and expectations.
IIA Standards: 2310 - Identifying Information
IIA Practice Guide: Auditing Capital Projects and Construction
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