IIA-CIA-PART2 practice questions 221–230

1. Question 221 · 475 in bank

   Which of the following would provide the best audit evidence regarding the effectiveness of an applied research department?

   • ADevelop a cost-per-product analysis for products developed over the past five years.
   • BDevelop a report on revenue generated by or cost savings directly attributable to newly developed products.
   • CCompare research as a percentage of revenue between this company and all major competitors in the same industry.
   • DCompare the number of this year's new product developments to the number of new product developments for the past five years.

   Show answer

   Answer: B

   Next question

2. Question 222 · 475 in bank

   An internal audit manager is supervising an engagement. A senior auditor deviates from the approved engagement plan but meets all deadlines in the approved time schedule. Which activity is not required for the audit manager to provide proper engagement supervision?

   • AActively participate in audit procedures.
   • BEnsure that all engagement objectives are met.
   • CApprove the deviation from the engagement plan.
   • DEnsure compliance with the time schedule.

   Show answer

   Answer: A

   Next question

3. Question 223 · 475 in bank

   A manufacturing organization is considering a merger with a similar firm, and requests that the chief audit executive (CAE) perform a due diligence audit. During the preliminary survey, the CAE notes that inventory management is a high risk area. In consultation with the external auditors and legal advisors, the CAE learns that they share those concerns. Which of the following is the CAE's best course of action?

   • APerform an independent audit of the merging firm's inventory management practices to verify the concerns and to provide relevant and reliable results to management for their consideration and action.
   • BAdvise management that internal audit, external audit, and legal advisors all have concerns about inventory management and, given the high materiality of inventory, management should not proceed with the merger.
   • CCoordinate a review of inventory management with external auditors and legal advisors and ensure each group focuses on their area of expertise to ascertain the extent of the problems, if any.
   • DCoordinate with the merging firm's internal audit department to better understand the inventory management function and whether the concerns are well-

   Show answer

   Answer: C

   Next question

4. Question 224 · 475 in bank

   An audit client responded to recommendations from a recent consulting engagement. The client indicated that several recommended process improvements would not be implemented. Which of the following actions should the internal audit activity take in response?

   • AEscalate the unresolved issues to the board, because they could pose significant risk exposures to the organization.
   • BConfirm the decision with management and document this decision in the audit file.
   • CDocument the issue in the audit file and follow up until the issues are resolved.
   • DInitiate an assurance engagement on the unresolved issues.

   Show answer

   Answer: B

   Next question

5. Question 225 · 475 in bank

   A company has recently incurred significant cost overruns on one of its construction projects. Management suspects that these overruns were caused by the contractor improperly accounting for costs related to contract change orders. Which of the following procedures would be appropriate for testing this suspicion? I. Verify that the contractor has not charged change orders with costs that have already been billed to the original contract. II. Determine if the contractor has billed for original contract work that was canceled as a result of change orders. III. Verify that the change orders were properly approved by management.

   • AI only
   • BIII only
   • CI and II only
   • DI and III only

   Show answer

   Answer: C

   Next question

6. Question 226 · 475 in bank

   The chief audit executive (CAE) manages a large internal audit activity (IAA) reporting functionally to the audit committee and administratively to the chief risk officer. During the CAE's recent unplanned medical leave, several internal audit reports were completed and waiting for CAE approval, however, no formal delegation of authority was in place to anticipate this situation. In order to preserve the independence of the IAA, which of the following would be the most appropriate individual to review and approve these reports during the CAE's absence?

   • AExternal auditor.
   • BChief risk officer.
   • CEngagement lead auditor.
   • DAudit committee chair.

   Show answer

   Answer: C

   Next question

7. Question 227 · 475 in bank

   Which of the following tests must an internal auditor perform in order to ensure that inbound electronic data interchange (EDI) transactions are received and translated accurately? I. Computerized tests to assess transaction reasonableness and validity. II. Review of log books to ensure that transactions are logged upon receipt. III. Edit checks to identify unusual transactions. IV. Verification of limitations on the authority of users to initiate specific EDI transactions.

   • AI and IV only
   • BII and III only
   • CI, II, and III only
   • DI, II, III, and IV.

   Show answer

   Answer: C

   Next question

8. Question 228 · 475 in bank

   Which of the following is the most important concept to be included in a consulting engagement agreement?

   • ADefine the duties and responsibilities needed from management to perform the engagement.
   • BDisclose the fact that auditors who perform the work may not be subject matter experts in the topic of the review.
   • CClarify that matters discovered during the engagement may also be reported to senior management and the audit committee.
   • DDisclose the fact that follow-up reviews may be conducted to ensure that recommendations are implemented adequately.

   Show answer

   Answer: C

   Next question

9. Question 229 · 475 in bank

   An internal audit activity is participating in the due diligence work for an acquisition that a company is considering. One engagement objective is to determine if the acquisition's accounts payable contain all outstanding liabilities. Which of the following audit procedures would not be relevant for this objective?

   • AExamine supporting documentation of subsequent (after-period) cash disbursements and verify period of liability.
   • BSend confirmations, including zero-balance accounts, to vendors with whom the company normally does business.
   • CSelect a sample of accounts payable from the accounts payable list and verify the supporting receiving reports, purchase orders, and invoices.
   • DTrace receiving reports issued before the period end to the related vendor invoices and accounts payable list.

   Show answer

   Answer: C

   Next question

10. Question 230 · 475 in bank

    An employee in the sales department completes a purchase requisition and forwards it to the purchaser. The purchaser places competitive bids and orders the requested items using approved purchase orders. When the employee receives the ordered items, she forwards the packing slips to the accounts payable department. The invoice for the ordered items is sent directly to the sales department, and an administrative assistant in the sales department forwards the invoices to the accounts payable department for payment. Which of the following audit steps best addresses the risk of fraud in the cash receipts process?

    • AVerify that approvals of purchasing documents comply with the authority matrix.
    • BObserve whether the purchase orders are sequentially numbered.
    • CExamine whether the sales department supervisor approves invoices for payment.
    • DDetermine whether the accounts payable department reconciles all purchasing documents prior to payment.

    Show answer

    Answer: C

    Next question

Keyboard:J Kmove between questionsA–Dselect an answerRshow or hide the answer← →change page

IIA-CIA-PART2 practice, question 221. 475 questions available.