IIA-CIA-PART2 practice questions 21–30

1. Question 21 · 475 in bank

   Which of the following is an advantage of an interim report? I. An interim report provides timely feedback to the audit engagement client. II. An interim report provides a mechanism for communicating information on red flags promptly while they are being investigated. III. An interim report provides an opportunity for auditor follow-up of findings before the engagement is completed. IV. An interim report increases the probability that corrective action will be initiated more quickly.

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

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   Answer: C

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2. Question 22 · 475 in bank

   According to the Standards, which of the following would least likely be considered a red flag when evaluating the risk for fraud?

   • ACash receipts appear to be lower than expected from an employee's cash drawer.
   • BHealth benefits are detected to be claimed for a deceased employee.
   • CAn employee did not approve an internal report detailing expenses for the month.
   • DIt is alleged that an employee is receiving vendor kickbacks.

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   Answer: C

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3. Question 23 · 475 in bank

   A company owns a machine that will produce 100 light switches in four hours. Due to increased demand, a second machine capable of producing 100 light switches in three hours has been added. Approximately how many hours will it take to produce 100 light switches using both machines working together?

   • A7.0
   • B3.5
   • C1.7
   • D0.58

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   Answer: C

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4. Question 24 · 475 in bank

   An internal auditor is assigned to conduct an audit of security for a local area network (LAN) in the finance department of the organization. Investment decisions, including the use of hedging strategies and financial derivatives, use data and financial models which run on the LAN. The LAN is also used to download data from the mainframe to assist in decisions. Which of the following should be considered outside the scope of this security audit engagement?

   • AInvestigation of the physical security over access to the components of the LAN.
   • BThe ability of the LAN application to identify data items at the field or record level and implement user access security at that level.
   • CInterviews with users to determine their assessment of the level of security in the system and the vulnerability of the system to compromise.
   • DThe level of security of other LANs in the company which also utilize sensitive data.

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   Answer: D

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5. Question 25 · 475 in bank

   The external auditor has identified a number of production process control deficiencies involving several departments. As a result, senior management has asked the internal audit activity to complete internal control training for all related staff. According to IIA guidance, which of the following would be the most appropriate course of action for the chief audit executive to follow?

   • ARefuse to accept the consulting engagement because it would be a violation of independence.
   • BCollaborate with the external auditor to ensure the most efficient use of resources.
   • CAccept the engagement but hire an external training specialist to provide the necessary expertise.
   • DAccept the engagement even if the audit engagement staff was previously responsible for operational areas being trained.

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   Answer: D

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6. Question 26 · 475 in bank

   A payroll clerk enters payroll transactions into the general ledger. The staff accountant reconciles the payroll ledgers. The payroll manager issues the manual payroll checks. The checks are maintained in a locked cabinet. The chief financial officer secures the keys to the cabinet. The payroll clerk distributes the manual checks. The payroll manager reconciles the bank statements monthly. Which of the following audit steps best addresses the risk of fraud in the payroll process?

   • AExamine whether the payroll manager approves the reconciliations of ledgers.
   • BDetermine whether an approved list of voided checks exists.
   • CDetermine whether the cabinet keys are secured properly.
   • DVouch a sample of items on bank reconciliations to supporting documentation.

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   Answer: D

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7. Question 27 · 475 in bank

   A retail sales company has discontinued a product that normally sold for $100. During the first month of a sale of the product, a 20 percent discount was given. Later that sale price was reduced by an additional 40 percent. What was the overall discount from the original selling price?

   • A60 percent.
   • B52 percent.
   • C48 percent.
   • D30 percent.

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   Answer: B

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8. Question 28 · 475 in bank

   An audit of management's quality program includes testing the accuracy of the cost-of-quality reports provided to management. Which of the following internal control objectives is the focus of this testing?

   • ATo ensure compliance with policies, plans, procedures, laws, and regulations.
   • BTo ensure the accomplishment of established objectives and goals for operations or programs.
   • CTo ensure the reliability and integrity of information.
   • DTo ensure the economical and efficient use of resources.

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   Answer: C

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9. Question 29 · 475 in bank

   According to the International Professional Practices Framework, which of the following situations is an indicator of a healthy relationship between the audit committee and the internal audit function?

   • AThe chief audit executive (CAE) has direct access to the audit committee and the board but typically does not interact directly with them unless a material weakness in the control environment is identified.
   • BThe CAE sends the audit committee all communications between the internal audit department and the audit client in order to keep the audit committee up to date on the engagement.
   • CThe CAE does not distribute audit reports to the audit committee. However, the audit committee is made aware of the scope and findings of audits performed.
   • DWhenever a potential audit finding or testing exception is first identified, the audit committee is immediately notified, as well as for any subsequent changes in

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   Answer: C

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10. Question 30 · 475 in bank

    A recent survey indicated that residents of a small town take the train to a nearby city eight times per month, on average. The same survey showed that the number of train trips that a resident takes per month (y) is determined by the number of days per month that the resident works in the nearby city (x), according to the equation: y = 2 + 2x. A person who never works in the nearby city is expected to take the train:

    • AZero times per month.
    • BTwo times per month.
    • CFour times per month.
    • DEight times per month.

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    Answer: B

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IIA-CIA-PART2 practice, question 21. 475 questions available.