IIA-CIA-PART2 practice questions 301–310

1. Question 301 · 475 in bank

   An internal auditor conducted interviews with several employees, documented the interviews, analyzed the summaries, and drew a number of conclusions. What sort of audit evidence has the internal auditor primarily obtained?

   • ADocumentary evidence.
   • BTestimonial evidence.
   • CAnalytical evidence.
   • DPhysical evidence.

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   Answer: B

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2. Question 302 · 475 in bank

   An internal auditor completed a review of expenses related to the launch of a new project. The auditor sampled 45 transactions approved by a senior project manager and identified 30 with questionable vendor documentation. Which of the following is the most appropriate conclusion for the auditor to include in the audit report?

   • AThe organization incurred excessive cost overruns that resulted in significant financial and legal risk to the project.
   • BThe organization experienced a potential conflict of interest.
   • CThe organization had weaknesses in its review process, which allowed questionable transactions with some vendors.
   • DThe organization allowed the project to launch without assurance that all transactions were regularly approved.

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   Answer: C

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3. Question 303 · 475 in bank

   Senior management requested that the internal audit activity perform a consulting project to assist in making a decision on a new software system. Which of the following would be used to determine the engagement objectives?

   • AAn assessment of risks to the business objectives.
   • BAn understanding of the engagement client's expectations.
   • CThe probability of significant errors, fraud, or noncompliance.
   • DCriteria previously established by the board.

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   Answer: B

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4. Question 304 · 475 in bank

   The chief audit executive can illustrate the value of the internal audit activity by reporting which of the following to the board?

   • AThe overall performance resulting from the internal audit balanced scorecard.
   • BThe number of outstanding and overdue management actions.
   • CThe experience of the organization's internal auditors.
   • DThe number of audits in the annual audit plan relative to similar organizations.

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   Answer: A

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5. Question 305 · 475 in bank

   An audit observation noted that annual inventory counts of biofuel was not being performed appropriately. Fuel yards were not visited and physical amounts of biofuel were not reconciled with accounting data. Management of the division understood the issue and promised to resolve the problem. When should the internal auditor schedule a follow-up review?

   • AAs soon as possible; no later than two months after the audit.
   • BWhen convenient for both parties.
   • CWhen management has indicated that the issue has been resolved.
   • DBefore financial year end.

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   Answer: C

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6. Question 306 · 475 in bank

   A chief audit executive (CAE) determined that operational management did not address an open internal control issue, which creates a risk of material misstatement of the organization's financial statements. Which of the following is the best course of action for the CAE to take?

   • AImmediately report the issue to the board.
   • BTake the necessary corrective action to address the issue.
   • CEscalate the issue to senior management.
   • DInform the external auditors about the issue.

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   Answer: C

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7. Question 307 · 475 in bank

   According to IIA guidance, the chief audit executive is directly responsible for which of the following?

   • AMaintaining a quality assurance program, even in the absence of management support.
   • BPeriodically reviewing and approving the internal audit charter.
   • CProviding opportunities for all staff auditors to satisfy their professional development requirements.
   • DEstablishing the objectives, scope, and plan for each engagement.

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   Answer: A

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8. Question 308 · 475 in bank

   Which of the following statements is true regarding the use of internal control questionnaires (ICQs)?

   • AICQs are efficient because they minimize the need for follow-up with survey respondents.
   • BControls with positive survey responses can be eliminated from further testing.
   • CAnswers to survey questions can be easily misinterpreted.
   • DICQs offer limited value for organizations with uniform procedures.

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   Answer: C

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9. Question 309 · 475 in bank

   At a construction company, an internal auditor is planning an audit of the company's process for designing and building grid connections. The process involves customers making payments in three parts: - The first payment of 10% after approval of the customer's application. - The second payment of 70% prior to construction. - The third payment of 20% after construction is complete. Which of the following key controls should the auditor test to ensure that the company is not taking any unwanted credit risks?

   • AControls that ensure that grid connection design is finalized before construction is approved to begin.
   • BControls that ensure construction orders are initiated after the second invoice is paid.
   • CControls that ensure all three invoices are calculated correctly according to the total project cost.
   • DControls that ensure that applications are verified for approval prior to initiating design and construction.

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   Answer: B

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10. Question 310 · 475 in bank

    Which of the following statements is true in regard to policies and procedures for guiding the internal audit activity?

    • AA small internal audit activity may be managed informally.
    • BAll internal audit activities need formal policies and procedures to guide them regardless of size.
    • CA large internal audit activity may be managed informally if the chief audit executive decides to do so.
    • DThere is no need for separate policies and procedures if audits are conducted in accordance with The IIA's International Professional Practices Framework.

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    Answer: A

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IIA-CIA-PART2 practice, question 301. 475 questions available.