IIA-CIA-Part2 Free

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CIA Exam Part Two: Practice of
Internal Auditing

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 1. An internal auditor provided the following statement about division
A's performance during the month: "Because supplies of raw material
X were scarce, division A's profits declined by 15 percent."
Which of the following can be validly concluded from the auditor's
statement?
I. Division A's production level declined by 15 percent.
II. Division A could have sold more products than it produced.
III. Division A usually sells all of the products that it produces.
A. I only
B. II only
C. III only
D. I and II only
Answer: B

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 2. An internal auditor is reviewing a new automated human resources system. The
system contains a table of pay rates which are matched to the employee job
classifications.
The best control to ensure that the table is updated correctly for only valid pay
changes would be to:
A. Limit access to the data table to management and line supervisors who have
the authority to determine pay rates.
B. Require a supervisor in the department, who does not have the ability to
change the table, to compare the changes to a signed management authorization.
C. Ensure that adequate edit and reasonableness checks are built into the
automated system.
D. Require that all pay changes be signed by the employee to verify that the
change goes to a bona fide employee.
Answer: B

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 3.Given the scarcity of internal audit resources, a chief audit executive (CAE)
decided not to schedule a follow-up of audit recommendations when developing
engagement work schedules.
Does the CAE’s decision violate the Standards?
A. No, because the Standards do not specify whether follow-up is needed.
B. No, because when there is evidence of sufficient motivation by the client,
there is no need for follow-up action.
C. Yes, because scarcity of resources is not a sufficient reason to omit follow-up
action.
D. Yes, because the Standards require the auditors to determine whether the
client has appropriately implemented all of the auditor's recommendations.
Answer: C

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 4. Monetary-unit sampling is most useful when the internal
auditor:
A. Is testing the accounts payable balance.
B. Cannot cumulatively arrange the population items.
C. Expects to find several material errors in the sample.
D. Is concerned with overstatements.
Answer: D

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 5.If an auditor expects to find numerous discrepancies
between recorded values and audited values of sample
selections, which sampling technique would be most appropriate?
A. Attributes sampling.
B. Probability-proportional-to-size sampling.
C. Difference estimation sampling.
D. Discovery sampling.
Answer: C

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 6. Which of the following factors would increase the confidence level
in a variables sampling plan?
I. A larger sample size.
II. A stratified sample.
III. A larger standard deviation.
A. I and II only
B. I and III only
C. II and III only
D. I, II, and III
Answer: A

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 7. An organization's internal auditors are reviewing production costs at
a gas-powered electrical generating plant. They identify a serious
problem with the accuracy of carbon dioxide emissions reported to the
environmental regulatory agency, due to computer errors.
The auditors should immediately report the concern to:
A. The regulatory agency.
B. Plant management.
C. A plant health and safety officer.
D. The risk management function.
Answer: B

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 8. An audit department has received anonymous information that an
employee has allegedly been able to steal and cash checks sent to the
organization by customers.
What is the most efficient way for an auditor to determine how this
type of fraud could occur and who might be the perpetrator?
A. Confirm accounts receivable.
B. Confirm accounts payable.
C. Review the endorsements and banks of deposit on customers'
canceled checks.
D. Flowchart and analyze key controls in the cash receipts process.
Answer: D

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 9. When assessing the risk associated with an activity, an internal
auditor should:
A. Determine how the risk should best be managed.
B. Provide assurance on the management of the risk.
C. Modify the risk management process based on risk exposures.
D. Design controls to mitigate the identified risks.
Answer: B

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 10. Which of the following processes real-transaction data through
auditor-developed test programs?
A. Generalized audit software.
B. Tracing.
C. Parallel simul-ation.
D. Mapping.
Answer: C

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