IIA-CIA-Part2 Updated Exam Dumps [2026] Practice Valid Exam Dumps Question
IIA-CIA-Part2 Sample with Accurate & Updated Questions
NEW QUESTION # 78
An internal auditor recommended that an organization implement computerized controls in its sales system in order to prevent sales representatives from executing contracts in excess of their delegated authority levels. A follow-up review found that the sales system had not been modified, but a process had been implemented to obtain written approval by the vice president of sales for all contracts in excess of $1 million. The chief audit executive (CAE) would be justified in reporting this situation to the organization's board if: I.
In the opinion of the CAE, the level of residual risk assumed by senior management is too high.
II.
Testing of compliance with the new process finds that all new contracts in excess of $1 million have been approved by the vice president of sales.
III.
The cost of modifying the sales system to include a preventive control is less than $100,000.
- A. I and III only.
- B. I, II, and III.
- C. III only.
- D. I only.
Answer: D
NEW QUESTION # 79
Which of the following statements is true regarding managements use of judgement to design, implement, and conduct internal control?
- A. It is inappropriate for management to exercise judgement in assessing whether components are present, functioning, and operating together
- B. introducing judgment generally diminishes managements ability to make good decisions about internal control
- C. The use of judgment enhances managements ability to make better decisions about internal control, but cannot guarantee perfect outcomes.
- D. It is inappropriate for management to exercise judgement in areas such as specifying and using suitable accounting principles.
Answer: C
Explanation:
Management's use of judgment in designing, implementing, and conducting internal control is crucial for adapting to unique circumstances and complexities within an organization.
* Enhanced Decision-Making: Judgment allows management to tailor controls to the specific risks and operational realities of the organization, improving overall effectiveness.
* Limitations: While judgment improves decision-making, it cannot eliminate all risks or guarantee perfect outcomes due to inherent uncertainties and limitations in predicting all possible scenarios.
* Appropriate Use: It is appropriate for management to use judgment in applying accounting principles and assessing internal controls' presence and functioning.
* Inappropriateness: It would be incorrect to say that judgment diminishes decision-making capabilities or is inappropriate for assessing internal control components.
References:
"Internal Control - Integrated Framework" by COSO, which highlights the importance and limitations of judgment in internal control processes.
NEW QUESTION # 80
An organization's board would like to establish a formal risk management function and has asked the chief audit executive (CAE) to be involved in the process. According to IIA guidance, which of the following roles should the CAE not undertake?
- A. Become involved in risk oversight committees, monitoring activities, and status reporting.
- B. Manage and coordinate risk management processes.
- C. Audit risk management processes.
- D. Accept management's responsibility for risk management without board approval.
Answer: D
Explanation:
According to IIA guidance, the chief audit executive (CAE) should maintain independence and objectivity in their role. While the CAE can manage and coordinate risk management processes, audit those processes, and be involved in risk oversight committees, they should not accept management's responsibility for risk management without the board's approval. This ensures that there is no conflict of interest and maintains the CAE's independence. References:
* IIA Standards - 1110: Organizational Independence
* IIA Practice Advisory - 2060-1: Reporting to Senior Management and the Board
NEW QUESTION # 81
Which of the following is an inherent risk of issuing an opinion on the overall effectiveness of internal control?
- A. The reliance on other assurance providers increases
- B. The results of the individual engagements do not support a positive assurance opinion on the effectiveness of internal control
- C. The audit risk and associated legal implications increase
- D. The results of individual engagements do not support a satisfactory opinion on the effectiveness of internal control.
Answer: C
Explanation:
Issuing an opinion on the overall effectiveness of internal control inherently carries the risk of increased audit risk and associated legal implications. This is because the opinion represents a high level of assurance, and any errors or omissions in the underlying audit work can lead to significant consequences, including potential legal liability. Therefore, auditors must be thorough and ensure that their conclusions are well-supported by the evidence obtained during the audit process.
Reference:
The Institute of Internal Auditors (IIA) Practice Guide: Forming an Opinion on the Overall Adequacy and Effectiveness of Internal Controls IIA Standard 2400 - Communicating Results
NEW QUESTION # 82
A chief audit executive agrees to conduct an engagement that will focus on customers' perceptions of the quality of the organization's products and services. Which of the following issues should be addressed first?
- A. Supplier deliveries.
- B. Cost-effectiveness.
- C. Quality control.
- D. Customer complaints.
Answer: D
NEW QUESTION # 83
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 new information to his general knowledge of the organization
- C. The auditor compares expected outcomes with actual results
- D. The auditor compares information he collected with simmer information from another source
Answer: D
Explanation:
Benchmarking in internal auditing involves comparing the performance or practices of the audited entity against a standard or best practice, which often involves using information from other organizations or sources as a reference. This process helps identify areas for improvement and set performance targets. Thus, comparing the collected information with similar information from another source is the correct definition of benchmarking.
References:
* The Institute of Internal Auditors (IIA) Practice Guide: Internal Audit and Organizational Performance
* IIA Standard 1220 - Due Professional Care
NEW QUESTION # 84
The internal audit activity plans to assess the effectiveness of management's self-assessment activities regarding the risk management process. Which of the following procedures would be most appropriate to accomplish this objective?
- A. Conduct interviews with line and senior management on current practices.
- B. Review corporate policies and board minutes for examples of risk discussions.
- C. Research and review relevant industry information concerning key risks.
- D. Observe and test control and monitoring procedures and related reporting.
Answer: D
Explanation:
To assess the effectiveness of management's self-assessment activities regarding the risk management process, internal auditors should directly observe and test the control and monitoring procedures.
This hands-on approach allows auditors to verify the implementation and functionality of risk management controls and the accuracy of related reporting.
Direct observation and testing provide the most reliable evidence of the effectiveness of these procedures
NEW QUESTION # 85
An internal auditor recommended that an organization implement computerized controls in its sales system in order to prevent sales representatives from executing contracts in excess of their delegated authority levels. A follow-up review found that the sales system had not been modified, but a process had been implemented to obtain written approval by the vice president of sales for all contracts in excess of $1 million. The chief audit executive (CAE) would be justified in reporting this situation to the organization's board iF.
I.
In the opinion of the CAE, the level of residual risk assumed by senior management is too high.
II.
Testing of compliance with the new process finds that all new contracts in excess of $1 million have been approved by the vice president of sales.
III.
The cost of modifying the sales system to include a preventive control is less than $100,000.
- A. I only
- B. I, II, and III
- C. I and III only
- D. III only
Answer: A
NEW QUESTION # 86
A retail company uses a computer program that matches electronic vendor invoices with the applicable purchase orders and receiving information, which are also maintained electronically.
If an invoice does not match the other items within predefined ranges, a report is generated and sent to the accounts payable department for further investigation. All of the applicable documents are electronically marked, cross-referenced, and retained in open files. Both an integrated test facility and a systems control audit review file (SCARF) have been included in the system.
An auditor wants to determine the extent to which items are not matched at year end and to investigate the potential causes of the unmatched items. Which of the following audit procedures would be most effective in determining the items to investigate?
- A. Submit test data to identify attributes of unmatched items. Follow up by investigating the identified attributes.
- B. Use generalized audit software to read the purchase orders and trace to applicable receiving and vendor invoice files.
- C. Use the SCARF to identify unusual items. Select an attributes sample and trace to the underlying documentation.
- D. Use generalized audit software to read the electronically marked unmatched items.
Answer: D
NEW QUESTION # 87
During the filework phase of an assurance engagement the internal auditor decides that she wants to adjust the audit work program. Which of the following is the most appropriate next step for the auditor to take9
- A. Obtain the required resources, including IT. to complete the work
- B. Request additional information needed from management of the area under review.
- C. Discuss the change in scope with management of the area under review.
- D. Obtain approval from the engagement supervisor
Answer: C
NEW QUESTION # 88
An internal auditor discovered a control weakness that needs to be communicated to management. Which of the following is the best method for first communicating the weakness?
- A. Verbal communication during the engagement, followed by the final report issuance.
- B. Final report, after review by audit management.
- C. Draft report, to be reviewed by management just prior to final report issuance.
- D. Preliminary observation document, discussed during the engagement.
Answer: A
Explanation:
* A. Draft report:Delays action on the weakness, which could be addressed sooner.
* B. Preliminary observation document:While helpful, this is not as immediate as verbal communication.
* C. Final report:Waiting until the final report would unnecessarily delay corrective action.
* D. Verbal communication during the engagement, followed by the final report issuance:Correct. Verbal communication allows immediate management action, with documentation to follow.
CIA Exam Syllabus Reference:
Domain V: Performing Internal Audit Services - Effective Communication of Findings.
NEW QUESTION # 89
According to IIA guidance, which of the following strategies would be the least effective in helping a chief audit executive build a stronger relationship with the board?
- A. Consider formality and tone of communications to ensure they are appropriate.
- B. Minimize instances of ad hoc communications with board members.
- C. Avoid making presumptuous comments without sufficient facts.
- D. Consider the possible repercussions created by commentary on deficiencies.
Answer: B
NEW QUESTION # 90
Which of the following types of resources is the most important and challenging to identify and allocate in order to perform an audit engagement?
- A. Human resources.
- B. Monetary budget.
- C. IT resources.
- D. External resources.
Answer: A
Explanation:
Comprehensive and Detailed Explanation From Exact Extract:
Per Standard 2030 - Resource Management, the CAE must ensure appropriate resources are available for engagements. While budgets and IT tools matter, the most critical and challenging resource to allocate is qualified human resources. Skilled auditors with appropriate expertise are essential to meet objectives, and talent shortages often make this the hardest resource to secure.
NEW QUESTION # 91
Which of the following factors would be the most critical in determining which engagements should be included in the annual internal audit plan?
- A. Whether an audit is explicitly required by the internal audit charter
- B. The organization's annual risk management strategy
- C. The extent to which the work to be performed is an assurance or consulting engagement
- D. Risks that are identified by operations staff or senior management
Answer: A
NEW QUESTION # 92
Which of the following documents are internal auditors most likely to be asked to sign as a demonstration of due professional care?
- A. A description of their job responsibilities.
- B. The internal audit charter
- C. An annual declaration of commitment to The HAs Code of Ethics.
- D. A non-disclosure agreement
Answer: C
Explanation:
* Professional Responsibility: Internal auditors are expected to demonstrate their commitment to professional standards and ethics.
* Code of Ethics: The IIA's Code of Ethics outlines principles that internal auditors must follow, including integrity, objectivity, confidentiality, and competency.
* Annual Declaration: Signing an annual declaration reinforces the auditor's commitment to these principles and ensures ongoing adherence to the professional standards.
* Demonstration of Due Care: By signing this declaration, auditors formally acknowledge their responsibility to uphold ethical standards, which is a demonstration of due professional care.
References:
The IIA's Code of Ethics.
The IIA's International Standards for the Professional Practice of Internal Auditing.
NEW QUESTION # 93
An internal auditor has a recommendation to change operations which could potentially increase profits by $50,000. The best way to sell this recommendation to management is to:
- A. Discuss it with operating supervisors who are directly affected by the change, and then with department management.
- B. Bring it to the audit manager, who should bring it immediately to senior management's attention.
- C. Carefully work out the details of implementation before presenting it to department management.
- D. Wait until the exit conference to discuss it in order to ensure all affected parties are present.
Answer: A
NEW QUESTION # 94
Which of the following is a primary reason for an internal auditor to use a risk and control questionnaire when auditing financial processes?
- A. To gam an understanding of the control environment
- B. To collect as much financial data as possible before engagement fieldwork begins.
- C. To facilitate the quantification of financial data obtained
- D. To test the effectiveness of financial controls in an efficient and relatively inexpensive way
Answer: D
NEW QUESTION # 95
In which scenario might it be considered problematic for the chief audit executive (CAE) to provide assurance services over the payroll function?
- A. The CAE previously undertook a consulting assignment in that area to improve processes.
- B. Prior to becoming the CAE, the CAE was the payroll manager.
- C. The assurance review was initiated following issues identified during a consulting assignment requested by management.
- D. A couple of years ago, the CAE performed accounting functions for the payroll department.
Answer: B
Explanation:
* Introduction:
* The independence and objectivity of the internal audit function are paramount, especially when the CAE has had prior involvement in the area under review.
* Scenario Analysis:
* Option A: Previous consulting assignments may raise concerns but do not inherently impair independence if managed correctly.
* Option B: A historical role in accounting functions is less problematic if sufficient time has passed and there is no ongoing influence.
* Option C: Having been the payroll manager presents a direct conflict of interest, compromising the CAE's objectivity.
* Option D: Reviews following consulting assignments are common practice and do not necessarily indicate a conflict.
* Conclusion:
* It is problematic for the CAE to provide assurance over payroll functions if they were previously the payroll manager, as this creates a clear conflict of interest and threatens audit objectivity.
IIA's International Standards for the Professional Practice of Internal Auditing, Standard 1130: Impairment to Independence or Objectivity.
NEW QUESTION # 96
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. II and III only
- B. I, II, and III
- C. I and II only
- D. I and III only
Answer: C
Explanation:
Section: Volume A
NEW QUESTION # 97
Which of the following conditions are necessary for successful change management?
1. Decisions and necessary actions are taken promptly.
2. The traditions of the organization are respected.
3. Changes result in improvement or reform.
4. Internal and external communications are controlled.
- A. 2 and 3
- B. 1 and 2
- C. 2 and 4
- D. 1 and 3
Answer: D
Explanation:
Successful change management requires prompt decision-making and actions, as well as ensuring that changes lead to improvement or reform. Respecting the traditions of the organization and controlling internal and external communications are important, but not as critical to the success of change management as the necessity for timely actions and positive outcomes. Reference:
IIA Practice Guide - Change Management: Facilitating Organizational Change IIA Standards - 2210: Engagement Objectives
NEW QUESTION # 98
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. Yes, because scarcity of resources is not a sufficient reason to omit follow-up action.
- B. No, because the Standards do not specify whether follow-up is needed.
- C. No, because when there is evidence of sufficient motivation by the client, there is no need for 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: A
NEW QUESTION # 99
Which of the following would cause a company's accounts receivable turnover ratio to decrease steadily over a three-year period?
- A. Increased cash sales.
- B. A more liberal credit policy.
- C. Invoices provided on a weekly rather than a monthly basis.
- D. An increase in the discount offered for early payment.
Answer: B
Explanation:
Section: Volume B
Explanation/Reference:
NEW QUESTION # 100
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