IIA IIA-CIA-Part2 Practice Test - Questions Answers, Page 28

To mitigate the risk that all bank accounts may not be included in the daily reconciliation process, the most effective response is to ensure that the treasury analyst reviews a daily report generated by the treasury system. This report highlights any bank statements that have not been uploaded into the accounting system, ensuring that all accounts are accounted for in the reconciliation process. This automated approach reduces the risk of human error and ensures completeness and accuracy in the reconciliation process.

The Institute of Internal Auditors (IIA) Practice Guide: Auditing the Treasury Function

IIA Standard 2130 - Control

When using benchmarking to test the employee turnover rate, the internal auditor should compare the organization's turnover rate to the published turnover rates of peer organizations. This method provides a relevant standard or point of reference to evaluate the organization's performance relative to similar entities. By using external benchmarks, the auditor can identify whether the turnover rate is above or below industry norms, which helps in assessing the effectiveness of the organization's HR practices.

The Institute of Internal Auditors (IIA) Practice Guide: Internal Audit and Organizational Performance

IIA Standard 1220 - Due Professional Care

When auditing an organization's cash-handling activities, the most reliable form of testimonial evidence comes from a knowledgeable person who is independent of the cashiering duty. This independence ensures that the testimonial evidence is unbiased and not influenced by those directly involved in the processes being reviewed. Such evidence is considered more reliable as it is less likely to be affected by personal interests or biases.

The Institute of Internal Auditors (IIA) Practice Guide: Evaluating Evidence

IIA Standard 2310 - Identifying Information

Issuing an opinion on the overall effectiveness of internal control inherently carries the risk of increased audit risk and associated legal implications. This is because the opinion represents a high level of assurance, and any errors or omissions in the underlying audit work can lead to significant consequences, including potential legal liability. Therefore, auditors must be thorough and ensure that their conclusions are well-supported by the evidence obtained during the audit process.

The Institute of Internal Auditors (IIA) Practice Guide: Forming an Opinion on the Overall Adequacy and Effectiveness of Internal Controls

IIA Standard 2400 - Communicating Results

According to IIA guidance, sufficient and reliable information is characterized by the ability to reach consistent audit conclusions regardless of who performs the audit. This means that the information collected during the audit is adequate, factual, and well-documented so that different auditors would be able to draw the same conclusions based on the evidence. Consistency in audit conclusions enhances the reliability and credibility of the audit process.

The Institute of Internal Auditors (IIA) Practice Guide: Quality Assurance and Improvement Program

IIA Standard 2310 - Identifying Information

IIA Standard 2330 - Documenting Information

During the planning stage of an assurance engagement, internal auditors should focus their attention on identifying and assessing inherent risks. Inherent risk is the risk of a material misstatement or noncompliance due to error or fraud that could occur before any controls are applied. Understanding inherent risk is crucial as it helps auditors identify areas that may need more extensive testing and ensures that audit resources are appropriately allocated to the highest risk areas.

The Institute of Internal Auditors (IIA) Practice Guide: Assessing the Adequacy of Risk Management Using ISO 31000

IIA Standard 2010 - Planning

When creating a risk and control matrix to understand a complex manufacturing process, the internal auditor should start by conducting a walk-through of all related activities. This approach allows the auditor to observe the processes in action, understand the flow of transactions, and identify key controls and risks. A walk-through provides a comprehensive understanding of the operational context, which is essential for developing an accurate and effective risk and control matrix.

The Institute of Internal Auditors (IIA) Practice Guide: Auditing the Control Environment

IIA Standard 2210 - Engagement Objectives

When developing the work program for an engagement reviewing an organization's small contracting services, the chief audit executive (CAE) should consider the organization's recent changes to how it processes payments. Changes in payment processing can significantly impact the control environment and may introduce new risks or control gaps. Understanding these changes will help the CAE design appropriate audit procedures to evaluate the effectiveness of the controls over the new processes.

The Institute of Internal Auditors (IIA) Practice Guide: Developing the Internal Audit Strategic Plan

IIA Standard 2200 - Engagement Planning

When an internal auditor identifies a potential significant weakness in a control and management does not agree with the assessment, the appropriate next step is to perform additional audit work to better articulate the risk. This means gathering more evidence, conducting further analysis, and providing clearer examples of how the weakness could impact the organization. By doing this, the auditor can better communicate the potential consequences and severity of the risk to management, increasing the likelihood of reaching a mutual understanding and agreement on the necessary actions.

The Institute of Internal Auditors (IIA) Practice Guide: Communicating Risk and Control Information

IIA Standard 2310 - Identifying Information

IIA Standard 2410 - Criteria for Communicating