[Jul 26, 2026] IIA-CIA-Part2 PDF Questions and Testing Engine With 709 Questions
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NEW QUESTION # 221
An internal auditor suspects that employee turnover is unusually high at the organization's primary manufacturing plant To investigate this potential issue which of the following analytical approaches is the auditor likely to use?
- A. Benchmarking
- B. Vertical analysis
- C. Cost-benefit analysis.
- D. Ratio analysis
Answer: A
Explanation:
To investigate unusually high employee turnover at the organization's primary manufacturing plant, the internal auditor is likely to use benchmarking. Benchmarking involves comparing the organization's turnover rates with those of similar organizations or industry standards to identify deviations and potential issues. This approach helps in understanding whether the turnover rate is indeed unusually high and what factors may be contributing to it.
IIA Practice Guide: Benchmarking in Internal Audit
IIA Standards: 1220 - Due Professional Care
NEW QUESTION # 222
Which of the following factors is least essential to a successful control self-assessment workshop?
- A. Prior planning.
- B. Voting technology.
- C. Facilitation training.
- D. Group dynamics.
Answer: B
Explanation:
Section: Volume B
NEW QUESTION # 223
Which of the following is the best approach for the internal audit function to communicate moderate and high risk observations to management?
- A. Verbally communicate the high risk observations to management when identified and prepare a documented worksheet that includes the root cause, effect, and recommendations.
- B. Prepare a formal observation worksheet for all observations identified and send to management to review and provide feedback at the end of fieldwork.
- C. Prepare a formal observation worksheet for the high risk observations and a separate worksheet for the medium risk observations in an email to management.
- D. Verbally communicate all observations to management at the end of fieldwork and provide a formal worksheet for review and feedback.
Answer: A
Explanation:
According to Standard 2440 - Disseminating Results, internal auditors should communicate significant observations timely, especially high-risk issues that require immediate attention. Verbal communication upon identification allows management to act quickly, while formal documentation ensures proper recording and follow-up. Option B reflects this balance by providing both verbal escalation for high risk and documented evidence of findings with root cause, effect, and recommendation.
NEW QUESTION # 224
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 in accordance with the terms of the contract.
- B. Carried out using standard review procedures for retailers.
- C. Carried out in accordance with the Standards.
- D. Performed under the supervision of the information technology department.
Answer: C
NEW QUESTION # 225
Which of the following tasks would be considered unusual for planning a control self-assessment workshop?
- A. Conducting interviews to identify relevant issues for the discussion.
- B. Identifying key stakeholders and ensuring they are represented in the group.
- C. Ensuring that managers are willing to accept constructive criticism.
- D. Securing an external subject matter expert to arbitrate disputes.
Answer: D
NEW QUESTION # 226
While conducting an audit of a third party's Web-based payment processor, an internal auditor discovers that a programming error allows customers to create multiple accounts for a single mailing address. Management agrees to correct the program and notify customers with multiple accounts that the accounts will be consolidated. Which of the following actions should the auditor take?
1. Schedule a follow-up review to verify that the program was corrected and the accounts were consolidated.
2. Evaluate the adequacy and effectiveness of the corrective action proposed by management.
3. Amend the scope of the subsequent audit to verify that the program was corrected and that accounts were consolidated.
4. Submit management's plan of action to the external auditors for additional review.
- A. 1 and 4
- B. 3 and 4
- C. 2 and 3
- D. 1 and 2
Answer: D
Explanation:
When an internal auditor discovers an issue such as a programming error allowing multiple accounts for a single address, the auditor should ensure that the corrective actions are both adequate and effective. This includes scheduling a follow-up review (1) to verify that the program has been corrected and that the accounts have been consolidated. Additionally, evaluating the adequacy and effectiveness of the corrective action proposed by management (2) is essential to ensure the issue has been resolved properly. References: = IIA Standard 2500 - Monitoring Progress and IIA Standard 2320 - Analysis and Evaluation.
NEW QUESTION # 227
At a construction company, an internal auditor is planning an audit of the company's process for designing and building grid connections The process involves customers making payments m three parts
* The first payment of 10% after approval of the customer s application
* The second payment of 70% prior to construction
* The third payment of 20% after construction is complete
Which of the following key controls should the auditor test to ensure that the company is not taking any unwanted credit risks?
- A. Controls that ensure that applications are verified for approval prior to initiating design and construction
- B. Controls that ensure construction orders are initiated after the second invoice is paid
- C. Controls that ensure all three invoices are calculated correctly according to the total project cost
- D. Controls that ensure that grid connection design is finalized before construction is approved to begin
Answer: B
Explanation:
To ensure that the company is not taking any unwanted credit risks, the internal auditor should test controls that ensure construction orders are initiated only after the second invoice, which represents 70% of the payment, is paid. This control is critical because it minimizes the financial risk to the company by ensuring that a significant portion of the payment is received before the majority of the work is undertaken. This practice helps protect the company from potential non-payment issues and reduces the financial exposure associated with the project.
:
COSO Framework
The Institute of Internal Auditors (IIA) Standard 2130: Control
NEW QUESTION # 228
An organization has acquired a new line of business. None of the organization's internal auditors have the required expertise to perform an internal audit of the new business line; therefore, the chief audit executive (CAE) has contracted the services of an external audit firm to perform the engagement. The CAE has assigned a member of the internal audit team to assist the external team with the engagement. According to the Standards, which of the following statements is true regarding supervision of the engagement?
- A. The CAE may rely upon the external firm's auditor in charge to supervise the engagement.
- B. The CAE should not assign an inexperienced staff member to assist with the engagement.
- C. The external firm's auditor in charge must defer to the judgment of the CAE for any disputes.
- D. The CAE is not responsible for the quality of an audit performed by an external firm.
Answer: C
NEW QUESTION # 229
A code of business conduct should include which of the following to increase its deterrent effect?
1. Appropriate descriptions of penalties for misconduct.
2. A notification that code of conduct violations may lead to criminal prosecution.
3. A description of violations that injure the interests of the employer.
4. A list of employees covered by the code of conduct.
- A. 1 and 3
- B. 2 and 4
- C. 3 and 4
- D. 1 and 2
Answer: D
NEW QUESTION # 230
Which of the following is not a primary purpose for conducting a walk-through during the initial stages of an assurance engagement?
- A. To test the adequacy of controls.
- B. To help develop process maps.
- C. To identify residual risks.
- D. To determine segregation of duties.
Answer: A
NEW QUESTION # 231
According to IIA guidance, which of the following activities are typically primary objectives of engagement supervision?
- A. Enable training and development of staff, identify engagement objectives, and assign responsibilities to individual auditors.
- B. Identify engagement objectives, assign responsibilities to individual auditors, and approve the engagement program.
- C. Assign responsibilities to individual auditors, approve the engagement program, and enable training and development of staff.
- D. Approve the engagement program, enable training and development of staff, and identify engagement objectives.
Answer: B
Explanation:
The primary objectives of engagement supervision in internal auditing, according to IIA guidance, involve several key activities: identifying engagement objectives, assigning responsibilities to individual auditors, and approving the engagement program. These steps are essential to ensure that the audit is conducted effectively and that the objectives are met.
Detailed Explanation:
IIA Standard 2340 - Engagement Supervision:
This standard outlines the responsibilities of those supervising audit engagements. Supervisors must ensure that the audit is properly planned, that objectives are clearly defined, that the right personnel are assigned, and that the engagement program is appropriate for achieving the objectives.
Key Activities in Supervision:
Identifying Engagement Objectives: This is the first step in ensuring that the audit addresses the most important risks and areas of concern. The supervisor must ensure that these objectives are clear and aligned with the organization's goals.
Assigning Responsibilities: Supervisors must ensure that tasks are allocated to auditors who have the appropriate skills and experience to carry them out effectively.
Approving the Engagement Program: The engagement program outlines the procedures and steps that will be taken to achieve the audit objectives. The supervisor's approval ensures that the program is comprehensive and aligned with the audit's goals.
IIA Practice Advisory 2340-1:
The advisory emphasizes the role of the auditor in charge in providing guidance, ensuring that objectives are met, and that the audit is conducted efficiently and effectively.
Why Not Other Options?
Option A (Enable training and development): While important, training and development are secondary objectives and not the primary focus of engagement supervision.
Option C (Training and development): Again, while important, these are supportive activities rather than the core focus of engagement supervision.
Option D (Training, development, and objectives): This option combines important activities but does not include assigning responsibilities, which is crucial in supervision.
NEW QUESTION # 232
Which of the following is a weakness that is inherent in the use of the test data method to test internal controls in a computer-based accounting system?
- A. The auditor must test many transactions with the same condition in order to achieve assurance that the condition is being detected.
- B. The approach requires the creation of "dummy companies," possibly destroying or altering actual company data in the process.
- C. Inclusion of atypical data in the test data may cause errors to be noted on the exception report.
- D. Conditions that were not specifically considered by the auditor may go untested.
Answer: D
Explanation:
Section: Volume A
NEW QUESTION # 233
When conducting audit follow-up of a finding related to cash management routines, an internal auditor would expect to find that all of the following changes have occurred except:
- A. Benefits have accrued to the entity as a result of resolving the condition.
- B. Inherent risk has been eliminated as a result of resolution of the condition.
- C. Controls have been implemented to deter or detect a recurrence of the finding.
- D. The steps being taken are resolving the condition disclosed by the finding.
Answer: B
NEW QUESTION # 234
Due to price risk from the foreign currency purchase of aviation fuel, an airliner has purchased forward contracts to hedge against fluctuations in the exchange rate. When recalculating the exchange losses from individual purchases of jet fuel, which of the following details does the internal auditor need to validate?
1.The hedge documentation designating the hedge.
2.The spot exchange rate on the transaction date.
3.The terms of the forward contract.
4.The amount of fuel purchased.
- A. 1 and 2
- B. 1 and 4
- C. 3 and 4
- D. 2 and 3
Answer: D
NEW QUESTION # 235
While reviewing the draft report of an audit engagement, the chief audit executive (CAE) is not in agreement with management's acceptance of the potential risk exposure resulting from an observed key control weakness. Which of the following actions by the CAE would be appropriate for addressing this concern?
* Meet with the auditor-in-charge.
* Discuss with senior management.
* Monitor the result of the accepted risk.
* Report the matter to the board.
- A. 1, 3, and 4 only
- B. 1, 2, and 4 only
- C. 2, 3, and 4 only
- D. 1, 2, and 3 only
Answer: B
NEW QUESTION # 236
According to IIA guidance, which of the following procedures would be least effective in managing the risk of payroll fraud?
- A. Payroll time sheets are reviewed and approved by the timekeeper before processing.
- B. Employee access to the payroll database is deactivated immediately upon termination.
- C. Changes to payroll are validated by the personnel department before being processed.
- D. The employee's name listed on organization's payroll is compared to the personnel records.
Answer: A
Explanation:
According to the IIA guidance, reviewing and approving payroll timesheets by the timekeeper before processing is considered least effective in managing the risk of payroll fraud. While this procedure might detect some errors or irregularities, it does not provide a robust control against fraud because the timekeeper can collude with employees or fail to review timesheets adequately. On the other hand, procedures such as comparing payroll lists to personnel records, deactivating payroll database access upon termination, and validating changes to payroll by the personnel department involve checks and balances that are more effective at preventing or detecting fraudulent activities.
:
IIA Practice Guide: Managing the Business Risk of Fraud: A Practical Guide IIA Standards and Guidance: IPPF - Practice Guide
NEW QUESTION # 237
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