Practice of Internal Auditing (IIA-CIA-Part2) Free Practice Test

Question 1

White planning an audit engagement of a procurement card activity. which of the following actions should an internal auditor take to denary relevant risks and controls?

A. Meet with the procurement card program administrator

B. Develop the scope and objectives of the engagement

C. Determine how many cardholders exceeded their daily limit.

D. Compare card transaction types against procurement card policy guidelines.

Correct Answer: A

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Question 2

Which of the following is an advantage of nonstatistical sampling over statistical sampling?

A. Nonstatistical sampling provides more objective recommendations for management.

B. Nonstatistical sampling provides for the use of subjective judgment in determining the sample size.

C. Nonstatistical sampling provides an opportunity to select the minimum sample size required to satisfy the objectives of the audit tests.

D. Nonstatistical sampling permits the auditor to specify a level of reliability and the desired degree of precision.

Correct Answer: B

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Question 3

An internal auditor and engagement client are deadlocked over the auditor ' s differing opinion with management on the adequacy of access controls for a major system. Which of the following strategies would be the most helpful in resolving this dispute?

A. Ask the chief audit executive to mediate.

B. Disclose the client ' s differing opinion in the final report.

C. Escalate the issue to senior management for a decision.

D. Conduct a joint brainstorming session with management.

Correct Answer: C

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Question 4

During an audit of the accounts payable process, an internal auditor was assigned to confirm the quantity of goods received on receiving documents to invoices for those goods and subsequent postings in the accounting system. Which of the following procedures would be most appropriate for this test?

A. Reperformance

B. Independent confirmation

C. Tracing

D. Vouching

Correct Answer: C

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Question 5

An internal auditor performed a review that focused on the organization's process for vetting vendors. The internal auditor's testing identified that 120 out of 130 vendors had a business relationship with the organization's procurement manager that violated conflict-of-interest policies. Which of the following conclusions could the internal auditor draw from these results?

A. The organization is exposed to significant fraud and abuse risks as a result of the vendor and employee business relationships.

B. Due to improper relationships and favoritism, vendors are not providing goods or services at a reasonable price to meet the objectives.

C. The organization's conflict-of-interest policies are not clear or well communicated throughout the organization.

D. Improper relationships and favoritism means that controls are not effective and significant fraud occurs.

Correct Answer: A

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Question 6

Which of the following analytical procedures should an internal auditor use to determine whether monthly expenses for the accounting department are reasonable?

A. Review total expenses for accounting against other department expenses in the organization.

B. Review the percentage of on-time payments against prior periods.

C. Review year-over-year trending of total dollars spent in each period.

D. Review changes to the vendor master file for suspicious activity.

Correct Answer: C

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Question 7

The internal audit manager has been delegated the task of preparing the annual internal audit plan for the forthcoming fiscal year. All engagements should be appropriately categorized and presented to the chief audit executive for review. Which of the following would most likely be classified as a consulting engagement?

A. Reviewing environmental, social, and governance reporting compliance.

B. Assessing financial reporting control adequacy.

C. Evaluating procurement department process effectiveness.

D. Helping in the design of the risk management program.

Correct Answer: D

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Question 8

Which of the following performance measures is considered a lagging indicator to the largest degree?

A. Employee satisfaction

B. Cost of research and development

C. Customer retention

D. Return on investment

Correct Answer: D

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Question 9

When is an organic organizational structure likely to be more successful than a mechanistic organizational structure?

A. When an organization is subjected to strong political and social pressures

B. When a manufacturing organization has stable demand for its products.

C. When a manufacturer has reliable resources and suppliers.

D. When an organization is infrequently affected by technological advances

Correct Answer: A

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Question 10

In which of following scenarios is the internal auditor performing benchmarking?

A. The auditor compares information from one period with the same information from the poor period

B. The auditor compares information he collected with simmer information from another source

C. The auditor compares new information to his general knowledge of the organization

D. The auditor compares expected outcomes with actual results

Correct Answer: B

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Question 11

For a new board chair who has not previously served on the organization's board, which of the following steps should first be undertaken to ensure effective leadership to the board*?

A. Chair should determine the appropriateness of the current strategic risks.

B. Chair should learn the current organizational culture of the company.

C. Chair should learn the current risk management system of the company

D. Chair should gain an understanding of the needs of key stakeholders.

Correct Answer: B

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Question 12

An internal auditor is asked to perform an assurance engagement in the organization ' s newly acquired subsidiary When developing the objectives tor the engagement which ot the following statements describes the most important items that the auditor needs to consider?

A. Previous performance of the subsidiary specifically its financial results over the last three years and the outcome of external audit reviews

B. Organizational strategy objectives, risks, control framework and the expectations of stakeholders regarding the audit

C. The results of previous internal audits of the subsidiary the recommendations provided and whether the recommended actions have been implemented

D. The qualifications and competencies of the subsidiary ' s management team and their understanding of risk and control

Correct Answer: B

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IIA Practice of Internal Auditing (IIA-CIA-Part2) Free Practice Test