IIA-CIA-PART2 practice questions 141–150

1. Question 141 · 475 in bank

   Which of the following will be an appropriate course of action when an auditor disagrees with a client about a well-documented audit finding?

   • AInclude both the audit finding and the client's position in the audit report.
   • BDefer reporting the item and plan to perform more detailed work during the next audit.
   • CChange the finding so that it is acceptable to the client.
   • DAddress the issue with senior management and the board for resolution prior to issuing the final report.

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   Answer: A

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2. Question 142 · 475 in bank

   An organization has adopted an enterprise-wide risk management process and has appointed a chief risk officer (CRO) to manage the process. The board has requested that the audit committee have oversight over the risk management function. Which of the following statements is not true regarding this situation?

   • AThe audit committee should get assurance on the adequacy and effectiveness of the risk management process from the CRO.
   • BThe chief audit executive has the mandate to conduct risk assessments and give assurance to the audit committee.
   • CThe audit committee, on behalf of the board, has overall responsibility for the risk management process in the organization.
   • DSenior management is accountable to the board for monitoring the system of internal controls.

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   Answer: A

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3. Question 143 · 475 in bank

   An internal auditor compared the number of human resources professionals per employee with industry standards. This comparison would assist the auditor in evaluating which of the following areas?

   • ASufficiency of controls over payroll rate increases.
   • BCurrent level of performance of the human resources department.
   • CAdequacy of controls over hiring new employees.
   • DDegree of compliance with human resources policies.

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   Answer: B

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4. Question 144 · 475 in bank

   An internal auditor is conducting a review of the procurement function and uncovers a potential conflict of interest between the chief operating officer and a significant supplier of IT software development services. Which of the following actions is most appropriate for the internal auditor to take?

   • AInform the audit supervisor.
   • BInvestigate the potential conflict of interest.
   • CInform the external auditors of the potential conflict of interest.
   • DDisregard the potential conflict, because it is outside the scope of the audit assignment.

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   Answer: A

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5. Question 145 · 475 in bank

   The scope of a business process review primarily involves:

   • AAppraising the environment and comparing against established criteria.
   • BAssessing the organization's system of internal controls.
   • CReviewing routine financial information and assessing the appropriateness of various accounting treatments.
   • DEvaluating organizational and departmental structures, including assessments of transaction flows.

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   Answer: D

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6. Question 146 · 475 in bank

   A large retail organization, which sells most of its products online, experiences a computer hacking incident. The chief IT officer immediately investigates the incident and concludes that the attempt was not successful. The chief audit executive (CAE) learns of the attack in a casual conversation with an IT auditor. Which of the following actions should the CAE take? 1. Meet with the chief IT officer to discuss the report and control improvements that will be implemented as a result of the security breach, if any. 2. Immediately inform the chair of the audit committee of the security breach, because thus far only the chief IT officer is aware of the incident. 3. Meet with the IT auditor to develop an appropriate audit program to review the organization's Internet-based sales process and key controls. 4. Include the incident in the next quarterly report to the audit committee.

   • A1 and 2
   • B1 and 3
   • C2 and 4
   • D3 and 4

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   Answer: A

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7. Question 147 · 475 in bank

   Which of the following would constitute a violation of the IIA Code of Ethics?

   • AAn internal auditor, who has recently joined the organization, has accepted an assignment to audit the electronics manufacturing division. The auditor previously served as senior auditor for the external audit of that division and has audited many electronics companies during the past two years.
   • BAn internal auditor has accepted an assignment to audit the warehousing function six months from now. The auditor has no expertise in that area but has signed up for courses in warehousing that will be completed before the assignment begins.
   • CAn internal auditor has no ambitions for promotion and has not engaged in training or other professional development activities during the last three years. The auditor's performance assessments indicate consistent quality of work.
   • DAn internal auditor discovered an internal financial fraud during the year, and the financial statements were adjusted to properly reflect the loss associated with

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   Answer: C

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8. Question 148 · 475 in bank

   An audit identified a number of weaknesses in the configuration of a critical client/server system. Although some of the weaknesses were corrected prior to the issuance of the audit report, correction of the rest will require between six and 18 months for completion. Consequently, management has developed a detailed action plan, with anticipated completion dates, for addressing the weaknesses. Which of the following is the most appropriate course of action for the chief audit executive to take?

   • AAssess the adequacy of the action plan and monitor key dates and deliverables.
   • BSchedule a follow-up audit engagement to assess the status of corrective action.
   • CReassign information systems auditors to assist the information technology department in correcting the weaknesses.
   • DEvaluate statistics related to unplanned system outages, unauthorized access attempts, and denials of service to assess the effectiveness of corrections.

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   Answer: A

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9. Question 149 · 475 in bank

   Due to the expanded role of internal audit in the organization, the chief audit executive (CAE) of a construction company decides to employ the services of an outsourced audit service provider to augment the internal audit staff. What does the CAE need to consider in determining whether the outsourced audit service provider possesses the necessary knowledge, skills and other competencies to perform an audit engagement?

   • ASpecific matters expected to be covered in the engagement communications.
   • BThe financial interest that the external service provider may have in the organization.
   • CThe extent of other ongoing services the external service provider may be performing for the organization.
   • DThe reputation of the external service provider.

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   Answer: D

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10. Question 150 · 475 in bank

    An internal auditor found that the cost of some material installed on capital projects had been transferred to the inventory account because the capital budget had been exceeded. Which of the following would be an appropriate technique for the auditor to use to determine the extent of the problem?

    • AIdentify variances between amounts capitalized each month and the capital budget.
    • BAnalyze a sample of capital transactions each quarter to detect instances in which installed material was transferred to inventory.
    • CReview all journal entries that transferred costs from capital to inventory accounts.
    • DCompare inventory receipts with debits to the inventory account and investigate discrepancies.

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    Answer: C

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IIA-CIA-PART2 practice, question 141. 475 questions available.