IIA-CIA-PART2 Online Practice Questions and Answers

An internal auditor would most likely use attributes sampling when testing which of the following?

A. Accounts receivable balances.

B. Correct coding of accounts payable disbursement vouchers.

C. Year-end inventory value.

D. Fixed asset book value.

An appliance repair company is considering relocating the center that houses its service vehicles. An internal auditor wants to determine the potential reduction in average miles driven by the service vehicles if the center is relocated. Which of the following statistical sampling methods would be most appropriate for this test?

A. Attributes sampling.

B. Discovery sampling.

C. Probability-proportional-to-size sampling.

D. Mean-per-unit sampling.

An internal auditor is evaluating controls over the purchasing function. The function includes the material control department, the purchasing department, and the receiving department. Which of the following is true regarding the presentation of the process flow among the three departments?

A. A vertical flowchart of each department, showing inputs at the top and outputs at the bottom, would be most useful.

B. Flowcharts are not useful for documenting process flow.

C. A horizontal flowchart, with the departments described across the top and the process flowing horizontally, would be most useful.

D. Both a flowchart and narratives are needed due to the number of departments involved.

Which of the following would not be characteristic of control self-assessment implemented by an audit department?

A. An auditor usually facilitates the discussion during the workshop phase while another records comments for subsequent use.

B. Auditors and business-unit employees work as a team.

C. Auditors perform traditional audit tests to identify control weaknesses.

D. Participants discuss the control weaknesses that hinder the achievement of objectives.

To furnish useful and timely information and promote improvements in operations, internal auditors should provide:

A. Senior management with reports that emphasize the operational details of defective conditions.

B. Operating management with reports that emphasize general concerns and risks.

C. Information in written form before it is discussed with the engagement client.

D. Reports that meet the expectations of both operational and senior management.

The internal auditor's opinion in terms of due professional care should be:

A. Limited to the effectiveness of internal controls.

B. Expressed only when consensus with top management has been achieved.

C. Based on experience and free of all bias.

D. Based on sufficient factual evidence.

According to the International Professional Practices Framework, the internal audit activity's decision to defer follow-up of recommendations and management's corrective actions until the next scheduled engagement for the area is justified when:

A. The reported findings or recommendations are significant enough to require immediate action by management.

B. The action taken by management to address the recommendation is sufficient when weighed against the importance of the finding.

C. Management has adequately understood and appropriately accepted the risk of not taking action to implement the recommendation.

D. The significance of the finding or recommendation will allow auditors to perform monitoring by receiving periodic updates from management on corrective actions taken.

Which of the following events would most likely cause the chief audit executive to consider changing the current year's audit plan?

1.

The government announced that new regulatory requirements will be introduced in the coming years which may significantly impact the organization's primary product.

2.

A major competitor unexpectedly introduced a new model at a lower price point to compete with the organization's market leading product.

3.

The organization announced a new joint venture with a long time corporate partner to introduce a new product with development costs and sales beginning next fiscal year.

4.

An equal joint venture partner filed a lawsuit against the organization and requested that the court issue an immediate suspension of future product shipments.

A. 1 and 2 only

B. 1 and 3 only

C. 2 and 4 only

D. 3 and 4 only

An internal auditor is asked to determine why the production line for a large manufacturing organization has be experiencing shutdowns due to unavailable parts. The auditor learns that production data used for generating automatic purchases via electronic interchange is collected on personal computers connected by a local area network (LAN). Purchases are made from authorized vendors based on both the production plans for the next month and an authorized materials requirements plan (MRP) that identifies the parts needed per unit of production. The auditor suspects the shutdowns are occurring because purchasing requirements have not been updated for changes in production techniques. Which of the following audit procedures should be used to test the auditor's theory?

A. Compare purchase orders generated from test data input into the LAN with purchase orders generated from production data for the most recent period.

B. Develop a report of excess inventory and compare the inventory with current production volume.

C. Compare the parts needed based on current production estimates and the MRP for the revised production techniques with the purchase orders generated from the system for the same period.

D. Select a sample of production estimates and MRPs for several periods and trace them into the system to determine that input is accurate.

A chief audit executive (CAE) reviews the supervision of an internal audit engagement. Which of the following would most likely assure the CAE that the engagement had adequate supervision?

A. The engagement supervisor has an open door policy for audit team members to discuss concerns.

B. The supervisor reviews weekly progress reports from the audit team members.

C. The supervisor reviews and initials internal audit workpapers for the engagement.

D. The supervisor meets periodically with management in the reviewed area to get feedback during the engagement.