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IIA-CIA-Part2 exam is an essential certification that focuses on the Practice of Internal Auditing. IIA-CIA-Part2 exam is designed to evaluate the candidate's knowledge and expertise in the field of internal auditing. Practice of Internal Auditing certification is offered by the Institute of Internal Auditors (IIA) and is recognized worldwide.

To be eligible for the IIA-CIA-Part2 exam, candidates must have successfully completed the IIA-CIA-Part1 exam and meet the educational and professional requirements set by the IIA. IIA-CIA-Part2 exam consists of 100 multiple-choice questions and is administered through a computer-based testing system. Candidates have four hours to complete the exam, and a passing score of 600 or higher is required to earn the certification. The IIA-CIA-Part2 exam is a challenging and rigorous exam that requires candidates to have a deep understanding of the principles and practices of internal auditing. However, achieving this certification can open up many opportunities for career advancement and professional development in the field of internal auditing.

 

NEW QUESTION # 76
According to IIA guidance, which of the following individuals should receive the final audit report on a compliance engagement for the organization's cash disbursements process?

• A. The accounts payable manager, purchasing manager, and receiving manager.
• B. The accounts payable supervisor, controller, and treasurer.
• C. The accounts payable supervisor, accounts payable manager, and controller.
• D. The accounts payable manager, chief financial officer, and audit committee.

Answer: D

Explanation:
For compliance engagements, particularly those related to critical processes such as cash disbursements, it is important to distribute the final audit report to individuals with oversight and decision-making responsibilities. The accounts payable manager oversees the process, the chief financial officer (CFO) has overall financial oversight, and the audit committee provides governance and oversight of the audit function. This ensures that the report is reviewed by those with the authority to implement changes and address any issues identified. Reference:
IIA Standards - 2440: Disseminating Results
IIA Practice Advisory - 2440-1: Disseminating Results

NEW QUESTION # 77
A company's policy requires that all customers be treated in a fair and consistent manner. Which of the following audit procedures would provide the most persuasive evidence that the policy was followed?

• A. Compare the aging of outstanding receivables due from each customer.
• B. Compare credit reports with annual sales for a sample of customers.
• C. Compare the ratio of outstanding receivables to the authorized credit limit for each customer.
• D. Compare the sales discounts offered to each customer.

Answer: D

Explanation:
Section: Volume A

NEW QUESTION # 78
A chief audit executive (CAE) has decided to add an engagement to the current audit plan which will exceed available audit resources. Which of the following is the best course of action for the CAE to take?

• A. Seek approval from senior management and the board of directors for the plan change and advise them of the issue of limited resources.
• B. Immediately seek additional resources from senior management and the board of directors to meet the needs of the organization.
• C. Present the plan change to senior management and request additional resources before going to the board of directors.
• D. Add this change to the plan and request senior management to indicate which other engagement should be deleted to keep the overall plan within resource constraints.

Answer: A

NEW QUESTION # 79
Which of the following behaviors could represent a significant ethical risk if exhibited by an organization's board?
1.Intervening during an audit involving ethical wrongdoing.
2.Discussing periodic reports of ethical breaches.
3.Authorizing an investigation of an unsafe product.
4.Negotiating a settlement of an employee claim for personal damages.

• A. 3 and 4
• B. 1 and 2
• C. 2 and 3
• D. 1 and 4

Answer: D

NEW QUESTION # 80
The board of directors expressed concerns about potential external risks that could impact the organization s ability to meet its annual objectives and goals The board requested consulting services from the internal audit activity to gain insight regarding the external risks Which of the following engagement objectives would be appropriate to fulfill this request?

• A. Assess the organization's process of vetting vendors that provide necessary services to the organization
• B. Assess the organization's controls implemented that would help minimize risks
• C. Assess the organization's risk impacts from the markets in which it operates
• D. Assess the organization's ability to minimize potential external risks

Answer: D

Explanation:
When the board requests consulting services to gain insight regarding external risks, the appropriate engagement objective is to assess the organization's ability to minimize these risks. This involves evaluating the organization's risk management framework, including identifying external risks, assessing their potential impact, and reviewing the effectiveness of the strategies and controls in place to mitigate these risks. By doing so, internal auditors provide valuable insights into how well the organization is prepared to handle external threats and ensure the achievement of its annual objectives.
Reference:
Institute of Internal Auditors (IIA) Standards: Performance Standards 2110: Governance COSO Enterprise Risk Management (ERM) Framework: Risk Assessment and Risk Response Components

NEW QUESTION # 81
Which of the following statements is false regarding audit criteria?

• A. Audit criteria should provide flexibility but allow identification of nonadherence.
• B. Audit criteria should be consistent across audit assignments.
• C. Audit criteria should equate to good or acceptable management practices.
• D. Audit criteria should represent reasonable standards against which to assess existing conditions.

Answer: B

Explanation:
Audit criteria should be appropriate and specific to each audit assignment, considering the unique context and objectives of each engagement. Consistency across all audit assignments (Option A) is not always feasible or desirable, as it could lead to inappropriate assessments. Instead, criteria should be flexible to allow the identification of nonadherence, represent reasonable standards, and align with good management practices relevant to each specific audit.
Reference:
IIA Standard 2201: Planning Considerations.
IIA Practice Guide on Audit Planning.

NEW QUESTION # 82
Information gathered in a forensic investigation of business fraud is usually gathered with which of the following standards in mind?

• A. Legal evidence.
• B. The International Professional Practices Framework.
• C. Generally Accepted Auditing Standards.
• D. Generally Accepted Accounting Principles.

Answer: A

NEW QUESTION # 83
Which of the following would be included in an internal audit department's quality assurance and improvement program?
1. Ongoing internal assessments of the performance of the internal audit department.
2. Periodic internal reviews through self-assessments.
3. Assessments conducted by a qualified external reviewer at least once every five years.

• A. 1 and 2 only
• B. 1, 2, and 3
• C. 1 only
• D. 2 and 3 only

Answer: B

NEW QUESTION # 84
Which type of engagement would be the most appropriate to assess the maturity and rigor of the organizationwide risk management process of a target entity that management is considering acquiring?

• A. An operational audit engagement.
• B. A feasibility study engagement.
• C. A due diligence engagement.
• D. A risk and control self-assessment engagement.

Answer: C

Explanation:
A due diligence engagement is the most appropriate type of engagement for assessing the maturity and rigor of the organization-wide risk management process of a target entity that management is considering acquiring. Due diligence involves a comprehensive appraisal of a business undertaken by a prospective buyer, especially to establish its assets and liabilities and evaluate its commercial potential. It typically includes evaluating financials, operational processes, and risk management frameworks to ensure informed decision-making about the acquisition.
Reference:
The Institute of Internal Auditors (IIA), Practice Guide on Due Diligence
"Mergers and Acquisitions: A Step-by-Step Legal and Practical Guide" by Edwin L. Miller, Jr.

NEW QUESTION # 85
A chief audit executive (CAE) of a major retailer has engaged an independent firm of information security specialists to perform specialized internal audit activities. The CAE can rely on the specialists' work only if it is:

• A. Performed under the supervision of the information technology department.
• B. Performed in accordance with the terms of the contract.
• C. Carried out in accordance with the Standards.
• D. Carried out using standard review procedures for retailers.

Answer: C

NEW QUESTION # 86
A chief audit executive is preparing interview questions for the upcoming recruitment of a senior internal auditor. According to IIA guidance, which of the following attributes shows a candidate's ability to probe further when reviewing incidents that have the appearance of misbehavior?

• A. Initiative.
• B. Flexibility.
• C. Integrity.
• D. Curiosity.

Answer: D

Explanation:
According to IIA guidance, curiosity is a key attribute that indicates a candidate's ability to probe further when reviewing incidents that have the appearance of misbehavior. Curiosity drives the auditor to ask deeper questions, seek out underlying causes, and thoroughly investigate anomalies. While integrity (Option A), flexibility (Option B), and initiative (Option C) are important qualities for an internal auditor, curiosity specifically relates to the propensity to investigate and uncover the truth behind incidents.References:
* IIA Standard 1200: Proficiency and Due Professional Care.
* IIA Practice Guide on Competency Framework for Internal Auditing.

NEW QUESTION # 87
A senior internal auditor is hired within the internal audit activity for a period of two years before advancing to an operations manager role within the business operations team. When staffing arrangement is being used in this scenario?

• A. Comer of competence
• B. Rotational model
• C. Career model
• D. Cosourcing agreement

Answer: C

NEW QUESTION # 88
The newly appointed chief audit executive (CAE) of a large multinational corporation, with seasoned internal audit departments located around the world, is reviewing responsibilities for engagement reports.
According to IIA guidance, which of the following statements is true?

• A. The internal audit charter must identify authorized signers of engagement reports.
• B. The CAE is required to review, approve, and sign all regulatory compliance engagement reports only
• C. The CAE is required to review, approve, and sign every engagement report.
• D. The CAE may delegate responsibility for reviewing, approving and signing engagement reports, but should review the reports after they are issued.

Answer: D

NEW QUESTION # 89
A large retail organization, which sells most of its products online, experiences a computer hacking incident.
The chief IT officer immediately investigates the incident and concludes that the attempt was not successful.
The chief audit executive (CAE) learns of the attack in a casual conversation with an IT auditor. Which of the following actions should the CAE take?
1. Meet with the chief IT officer to discuss the report and control improvements that will be implemented as a result of the security breach, if any.
2. Immediately inform the chair of the audit committee of the security breach, because thus far only the chief IT officer is aware of the incident.
3. Meet with the IT auditor to develop an appropriate audit program to review the organization's Internet-based sales process and key controls.
4. Include the incident in the next quarterly report to the audit committee.

• A. 1 and 3
• B. 3 and 4
• C. 2 and 4
• D. 1 and 2

Answer: A

Explanation:
The chief audit executive (CAE) should meet with the chief IT officer to discuss the incident, the investigation, and any control improvements that will be implemented (1). Additionally, developing an appropriate audit program with the IT auditor to review the organization's Internet-based sales process and key controls (3) is a proactive approach to ensure future incidents are prevented and to enhance the organization's security posture. References: = IIA Standard 2120 - Risk Management and IIA Standard 2201 - Planning Considerations.

NEW QUESTION # 90
Which of the following would be the least desirable criteria against which to judge current operations of an organization's treasury function?

• A. Finance textbook illustrations of generally accepted good treasury function practices.
• B. Codification of best practices of the treasury function in relevant industries.
• C. Company policies and procedures delegating authority and assigning responsibilities.
• D. The operations of the treasury function as documented during the last audit engagement.

Answer: D

Explanation:
Section: Volume C

NEW QUESTION # 91
Which of the following factors would not be considered in determining appropriate follow-up procedures?

• A. The potential consequences if the corrective action fails.
• B. The availability of funds in the audited department's budget to correct the reported condition.
• C. The significance of the audit finding.
• D. The effort and cost needed to correct the reported condition.

Answer: B

NEW QUESTION # 92
An audit of customer accounts receivable found that outstanding receivables as a percentage of revenue had increased significantly during the past two years. The increase was attributed to the extension of credit, at the urging of the marketing department, to a number of companies that were not credit worthy.
Which of the following would be least useful in monitoring the disposition of this finding?

• A. Information from the credit and marketing personnel assigned the responsibility for reevaluating credit policies.
• B. Periodic updates from the controller regarding the status of corrective actions.
• C. Updates from the information technology division regarding implementation of a new accounts receivable system.
• D. Responses from the manager of accounts receivable regarding collection of outstanding receivables.

Answer: C

NEW QUESTION # 93
An auditor evaluating excessive product rejection rates should investigatE.
I.
Communication between sales and production departments on sales returns.
II.
Volume of product sales year-to-date in comparison to prior year-to-date.
III.
Changes in credit ratings of customers versus sales to those customers.
IV.
Detailed product scrap accounts and accumulations.

• A. II, III, and IV only
• B. I, II, III, and IV.
• C. I and IV only
• D. I and III only

Answer: C

NEW QUESTION # 94
Production managers for a manufacturing company are authorized to prepare emergency purchase orders for raw materials. These manually prepared orders do not go through the purchasing department and do not require a receiving report. The managers forward the invoice and purchase order to the accounting department for payment. Which of the following internal controls would efficiently prevent abuse of this system?

• A. Forbid the use of emergency purchase orders.
• B. Institute a company policy requiring rotation of orders among several suppliers.
• C. Require a manual receiving report from the warehouse prior to payment.
• D. Review the level of safety stock.

Answer: C

NEW QUESTION # 95
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IIA-CIA-Part2 exam consists of 100 multiple-choice questions that test candidates' knowledge and understanding of internal audit practices, including risk management, governance, and internal control. Candidates must pass IIA-CIA-Part2 exam to move on to the third and final part of the CIA exam. Passing IIA-CIA-Part2 exam demonstrates to employers and clients that an individual has a strong understanding of the principles and practices of internal auditing, and is capable of providing valuable insights and recommendations to help organizations improve their operations and mitigate risk.

 

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