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What format is the IIA CIA Part 2 Exam?
Number of Questions: 100 questions
Format : multiple-choice
The passing score: 70%
Time Duration: 120 mins
Languages: English
NEW QUESTION 122
As a result of a recent discovery of false information on employment applications, an internal auditor has reviewed hiring procedures. Which of the following represents a weakness in the control system?
I. Applicants are not required to have their signed applications legally authenticated.
II. Applicants' educational information is not validated with the educational institution before employment is offered.
III. Information related to applicants' long-term work history is not validated before employment is offered.
- A. I, II, and III
- B. I and II only
- C. II and III only
- D. III only
Answer: C
NEW QUESTION 123
The internal auditor's opinion in terms of due professional care should be:
- A. Limited to the effectiveness of internal controls.
- B. Based on experience and free of all bias.
- C. Expressed only when consensus with top management has been achieved.
- D. Based on sufficient factual evidence.
Answer: D
NEW QUESTION 124
In a review of an electronic data interchange application using a third-party service provider, the auditor should:
I. Ensure encryption keys meet International Organization for Standardization (ISO) standards.
II. Determine whether an independent review of the service provider's operation has been conducted.
III. Verify that only public-switched data networks are used by the service provider.
IV. Verify that the service provider's contracts include necessary clauses, such as the right to audit.
- A. I and II only
- B. I and IV only
- C. II and IV only
- D. II and III only
Answer: C
Explanation:
Section: Volume B
NEW QUESTION 125
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.
- A. I only.
- B. I and II only.
- C. I and III only.
Verify that the change orders were properly approved by management. - D. III only.
Answer: B
NEW QUESTION 126
The internal audit activity of an investment company received a request to provide assurance on the risk management process. Preliminary discussion with senior management revealed that separate functions within the organization perform some form of risk management activities. Which of the following is the most effective tool for ensuring that risk management activities are coordinated among these functions?
- A. Delphi technique.
- B. Analytical reviews.
- C. Facilitated workshop.
- D. Assurance map.
Answer: D
Explanation:
Section: Volume D
NEW QUESTION 127
Which of the following might alert an auditor to the possibility of fraud in a division?
1. The division is not scheduled for an external audit this year.
2. Sales have increased by 10 percent.
3. A significant portion of management's compensation is directly tied to reported net income of the division.
- A. III only
- B. I only
- C. I, II, and III
- D. I and II only
Answer: A
NEW QUESTION 128
Which of the following internal control attributes should internal auditors consider testing during a review of the board of directors?
- A. The articulated internal control objectives of the organization
- B. The established philosophy and operating style of senior management
- C. The presence of an independent critical mass
- D. The organization's employee recruiting and retention policies
Answer: A
NEW QUESTION 129
The board has asked the internal audit activity (IAA) to be involved in the organization's enterprise risk management process. Which of the following activities is appropriate for IAA to perform without safeguards?
- A. Coach management in responding to risks.
- B. Develop risk management strategies for board approval.
- C. Facilitate identification and evaluation of risks.
- D. Evaluate risk management processes.
Answer: D
Explanation:
Section: Volume E
NEW QUESTION 130
A limitation of using ratio analysis in an audit engagement is that it:
- A. Often uses financial information provided by management which has not been reviewed for reliability and validity.
- B. Is useful only when comparisons can be made across other industries.
- C. Requires computer software in order to develop meaningful interpretations of data.
- D. Is an expensive method of testing.
Answer: A
NEW QUESTION 131
It is close to the fiscal year end for a government agency, and the chief audit executive (CAE) has the following items to submit to either the board or the chief executive officer (CEO) forapproval. According to IIA guidance, which of the following items should be submitted only to the CEO?
- A. The internal audit risk assessment and audit plan for the next fiscal year.
- B. A request for an increase of the CAE's salary for the next fiscal year.
- C. The evaluation and compensation of the internal audit team.
- D. The internal audit budget and resource plan for the coming fiscal year.
Answer: C
NEW QUESTION 132
According to the Standards, which of the following is applicable to the internal audit activity's quality assurance and improvement program?
- A. Periodic monitoring of the internal audit activity should be done.
- B. All aspects of the internal audit activity should be evaluated.
- C. An external assessment should be obtained every three years.
- D. The review of assurance services should be the primary focus.
Answer: B
NEW QUESTION 133
An internal auditor is conducting tests to determine if an organization is in compliance with its payment approval policies. After reviewing a sample of vouchers selected, the internal auditor concluded that there were indicators of fraud. Which of the following would be the most appropriate method to expand the audit test to achieve the audit objective?
I. Validate the completeness of the accounts payable files.
II. Examine the sample of vouchers in greater detail.
III. Increase the number of vouchers in the sample.
IV. Broaden the scope of the examination to include credits received by accounts payable.
- A. I, II, and IV only
- B. I and II only
- C. II and III only
- D. I, III, and IV only
Answer: C
NEW QUESTION 134
During a routine audit of a customer service hotline, an internal auditor noticed that an unusually high number of customer complaints pertained to payments not being applied to the customers' accounts. Which of the following would most likely be the reason for the high volume of complaints?
- A. Submission of fraudulent expense reports.
- B. An ineffective customer service department.
- C. Poor controls in the invoice approval processes.
- D. Check tampering by an employee.
Answer: D
NEW QUESTION 135
Which of the following would have the least significance in an audit of the efficiency of a driver's license testing facility?
- A. Clerical staff administer written tests to allow examiners more time to supervise driving tests.
- B. Examiners are required to be recertified on an annual basis.
- C. Staff are cross-trained to provide backup for other areas of the facility as required.
- D. A point-of-sale cashiering system reduces the need to reenter payment data.
Answer: B
NEW QUESTION 136
According to the Standards, which of the following is least important in determining the adequacy of an annual audit plan?
- A. Sufficiency.
- B. Appropriateness.
- C. Cost effectiveness.
- D. Effective deployment.
Answer: C
NEW QUESTION 137
In which of the following situations would it be most appropriate to employ the services of a forensic specialist?
- A. Review for misapplication of general computer controls over accounts receivable.
- B. Detection of unauthorized changes to source documents.
- C. Investigation of ghost employees in a large business.
- D. Verification of fixed assets in a manufacturing company.
Answer: B
NEW QUESTION 138
An auditor is using an internal control questionnaire as part of a preliminary survey. Which of the following is the best reason for the auditor to interview management regarding the questionnaire responses?
- A. Interviewing is the only audit procedure which does not require confirmation of the information that is obtained.
- B. Interviews are the most efficient way to upgrade the information to the level of objective evidence.
- C. Interviewing is the least costly audit technique when a large amount of information is involved.
- D. Interviews provide the opportunity to insert questions to probe promising areas.
Answer: D
NEW QUESTION 139
Which of the following actives is an internal auditor most likely to perform when establishing the objectives of an assurance engagement?
- A. Discuss the internal audit risk assessment including applicable risks and objectives with internal audit management
- B. Perform a walk-through of the process under review to determine whether control wore operating, effectively
- C. Meet with operational management to team about any areas of concern and to agree on the engagement objectives
- D. Identify when controls will be tested and the sampling method to be used based on control risk
Answer: B
NEW QUESTION 140
According to the International Professional Practices Framework, the responsibility for establishing and maintaining a system to monitor the disposition of results communicated to management falls upon:
- A. Chief audit executive.
- B. Compliance officer.
- C. Senior management.
- D. Risk manager.
Answer: A
NEW QUESTION 141
As part of an operational audit of the shipping department, an auditor selected a sample of 45 daily shipping logs from the department's files. On 44 of the days, the log contained a sufficient number of shipments to meet the department's daily quota. Based on this test, the auditor concluded that the shipping department was effective at meeting its quotas. Which of the following is true about the auditor's conclusion?
- A. The number of items selected for testing is inadequate to justify the conclusion.
- B. The shipping department is effective in meeting its responsibilities.
- C. None of the above.
- D. This conclusion would negate any need to perform tests of efficiency.
Answer: C
NEW QUESTION 142
Which of the following factors would increase the confidence level in a variables sampling plan?
1. A larger sample size.
2. A stratified sample.
3. A larger standard deviation.
- A. I, II, and III
- B. I and II only
- C. I and III only
- D. II and III only
Answer: B
NEW QUESTION 143
Which of the following best defines an audit opinion?
- A. An auditor's evaluation of the effects of the observations and recommendations on the activities reviewed.
- B. A conclusion which must be included in the audit report.
- C. A summary of the significant audit observations and recommendations.
- D. A recommendation for corrective action.
Answer: A
Explanation:
Section: Volume B
NEW QUESTION 144
According to the Standards, which of the following would least likely be considered a red flag when evaluating the risk for fraud?
- A. Health benefits are detected to be claimed for a deceased employee.
- B. An employee did not approve an internal report detailing expenses for the month.
- C. It is alleged that an employee is receiving vendor kickbacks.
- D. Cash receipts appear to be lower than expected from an employee's cash drawer.
Answer: B
Explanation:
Section: Volume D
NEW QUESTION 145
The human resources (HR) department was last reviewed three years ago and is due for an assurance engagement after undergoing recent process changes. Which of the following would the most effective option identify the HR department's risks and controls?
- A. Review the previous internal audit report and locus on key audit observations and action plans
- B. Review the organization's risk strategy and risk appetite framework
- C. Meet with the chief operating officer 10 obtain Information about the MR department
- D. Discuss the department's present strategies 'and objectives with the head of the HR department
Answer: D
NEW QUESTION 146
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