Free Practice Questions for IIA IIA-CIA-Part2 Exam

To mitigate the risk that all bank accounts may not be included in the daily reconciliation process, the most effective response is to ensure that the treasury analyst reviews a daily report generated by the treasury system. This report highlights any bank statements that have not been uploaded into the accounting system, ensuring that all accounts are accounted for in the reconciliation process. This automated approach reduces the risk of human error and ensures completeness and accuracy in the reconciliation process.

To determine whether company vehicles are being used for personal purposes, the auditor needs location and route data of the vehicles in addition to the initial data extracted. This additional information would allow the auditor to track the specific routes and destinations of the vehicles, making it possible to identify patterns of use that do not align with business purposes, especially during weekends. The location and route data can help in pinpointing any non-business-related usage of the vehicles, providing evidence of personal use.

The internal auditor should use a procedure that directly tests the theory that shutdowns are due to outdated purchasing requirements not reflecting changes in production techniques. By comparing the parts needed according to current production estimates and the updated MRP with the purchase orders generated by the system, the auditor can determine if there are discrepancies indicating that the system is not correctly updating for new production methods. This approach ensures that the investigation is focused on the root cause of the issue and provides evidence to support any findings related to the suspected problem.References:

Institute of Internal Auditors (IIA), International Standards for the Professional Practice of Internal Auditing (Standards), Standard 2310 – Identifying Information.

When the internal audit activity lacks the necessary resources to complete the audit plan, the most appropriate action for the CAE is to ensure that the audit plan is still executed effectively and efficiently. Outsourcing some of the audits to the organization’s external auditor, who is already familiar with the organization, can help mitigate resource constraints. This approach leverages the external auditor’s knowledge of the organization, ensuring continuity and quality in the audit process, while allowing the internal audit function to meet its obligations and deadlines.References:

IIA Standard 2030: Resource Management

IIA Practice Guide: Coordinating Internal Audit and External Audit

The best possible engagement objectives are those derived from a comprehensive risk assessment that incorporates inputs from both senior management and the company's risk function experts. This approach ensures that the internal audit objectives are aligned with the organization's strategic priorities and risk landscape. By combining insights from senior management with the technical expertise of risk function experts, the internal audit activity can develop well-rounded and relevant engagement objectives that address the most significant risks facing the organization.

Internal auditors must corroborate employee testimonials with tangible evidence to ensure the reliability and validity of the findings. Relying solely on testimonials without supporting evidence can lead to inaccurate conclusions. Standard 2310 – Identifying Information of the International Standards for the Professional Practice of Internal Auditing emphasizes that sufficient, reliable, relevant, and useful information should be obtained to achieve the engagement’s objectives.References:

Institute of Internal Auditors (IIA), International Standards for the Professional Practice of Internal Auditing (Standards), Standard 2310 – Identifying Information.

According to IIA guidance, the most important objectives for ensuring the appropriate completion of an engagement include coordinating audit team members to ensure efficient execution, confirming that engagement workpapers properly support the observations, recommendations, and conclusions, and ensuring that engagement objectives are reviewed for satisfactory achievement and are documented properly. These objectives focus on the quality and thoroughness of the audit work, which are critical for the engagement's success. References:

IIA Standards - 2300: Performing the Engagement

IIA Practice Guide - Audit Documentation

Utilizing an external fraud specialist in a suspected fraud investigation offers several advantages, particularly in preserving evidence and maintaining the chain of command. This is crucial for ensuring that the investigation is conducted legally and that any findings can be used in potential legal proceedings.

Expertise in Evidence Handling:

External fraud specialists typically have specific expertise in collecting, preserving, and documenting evidence in a manner that maintains its integrity. This includes maintaining a proper chain of custody, which is essential for legal admissibility.

IIA Practice Guide on Fraud Investigations:

The IIA suggests that involving specialists can enhance the credibility and effectiveness of an investigation. Specialists are trained to handle sensitive evidence and ensure that it is preserved correctly, reducing the risk of contamination or loss.

Chain of Command:

Maintaining a clear and secure chain of command during an investigation is critical. An external specialist is often better equipped to manage this process, ensuring that evidence is not tampered with and that all actions are documented appropriately.

Option A (Increased access to employees): While an external specialist may interview employees, this is not their primary advantage over internal auditors.

Option C (Increased ability to scrutinize processes): Specialists are skilled at this, but the key advantage lies in evidence preservation.

Option D (Increased access to software and data): Access to proprietary data is important, but internal auditors usually have this access as well.

Detailed Explanation:Why Not Other Options?