Free Practice Questions for IIA IIA-CIA-Part2 Exam

According to IIA guidance, mentoring relationships can significantly enhance professional development for internal auditors. Informal meetings between the mentor and the mentee allow for more open and flexible interactions, fostering a supportive environment for learning and development. While formal documentation can be useful, the primary value of mentoring often comes from the informal, ongoing dialogue and relationship that supports continuous learning and professional growth.References:

The Institute of Internal Auditors (IIA) - Practice Guide: Talent Management

For a consulting engagement, planning typically occurs after the engagement objectives and scope have already been determined. In consulting engagements, the objectives and scope are usually agreed upon with the client at the outset, and planning activities then focus on how to achieve these objectives within the defined scope.

Internal auditors can rely on the work of other assurance providers, including internal compliance teams, to expand their audit coverage efficiently. This practice is based on the principle of leveraging existing assurance functions within the organization to avoid duplication of efforts and to use resources more effectively. By relying on the work performed by compliance teams, internal auditors can ensure comprehensive coverage without necessarily increasing the direct audit hours. However, it is crucial that the internal auditors evaluate the competence and objectivity of the compliance teams and ensure that their work meets the required standards before relying on it.

Discovery sampling is a statistical sampling method that is specifically designed for detecting fraud or other irregularities. It is most appropriate when the auditor expects that deviations or fraud may be rare but significant if found.

Discovery Sampling:

Discovery sampling is used when the auditor is trying to identify at least one occurrence of a particular event, such as fraud. The sample is designed so that if a single error is found, it suggests that more may exist within the population, warranting further investigation.

Application in Fraud Detection:

Discovery sampling is effective in fraud detection because it focuses on identifying whether any instances of fraud exist within a population. This approach is well-suited for situations where even a small number of fraudulent transactions could have a significant impact.

IIA Practice Guide on Statistical Sampling:

The IIA suggests that discovery sampling is appropriate when the goal is to find the presence of an error or fraud, particularly in populations where such occurrences are expected to be infrequent.

Option B (Stop-or-go sampling): This method is used to control the risk of over-auditing when errors are expected to be low, but it is not specifically designed for fraud detection.

Option C (Haphazard sampling): This is a non-statistical sampling method and is not appropriate for systematic fraud detection.

Option D (Stratified attribute sampling): This method divides the population into subgroups but is not specifically aimed at discovering fraud.

Detailed Explanation:Why Not Other Options?Conclusion: Option A is correct because discovery sampling is the most appropriate statistical method for testing a population for fraud, as it is designed to detect even a small number of significant deviations, consistent with IIA guidance.

Generalized audit software (GAS) is specifically designed to assist auditors in performing various audit tasks, including extracting specific files and records from databases. GAS tools, such as ACL and IDEA, allow auditors to import data from various systems, query databases, perform data analysis, and generate reports. This makes them ideal for tasks that require the extraction and examination of specific records or data sets within a database. Other options, such as expert systems or system utility programs, do not offer the same targeted capabilities for data extraction relevant to auditing tasks.References:

Institute of Internal Auditors (IIA), Global Technology Audit Guide (GTAG) – Generalized Audit Software (GAS).

In internal auditing, the reliability of evidence is critical. According to IIA standards, evidence that is obtained directly from an external source, such as a customer, is generally considered more reliable, especially when it is timely.

IIA Standard 2310 – Identifying Information:

This standard requires that internal auditors obtain sufficient, reliable, relevant, and useful information to achieve the engagement’s objectives. Evidence obtained directly from external sources is often deemed more reliable because it is less likely to be biased or manipulated.

Direct Evidence:

Evidence obtained directly from a customer is considered highly reliable because it comes from an independent and external party. It is less likely to be influenced by internal pressures or conflicts of interest.

Timeliness:

The timeliness of evidence also affects its reliability. Recent and relevant information is more likely to accurately reflect the current state of affairs, making it more reliable for decision-making.

Option A (Untested third party): Although external, the reliability of evidence from an untested third party is uncertain until their credibility is established.

Option B (Uncorroborated evidence from an employee): This is less reliable as it may be subject to bias or self-interest.

Option C (Undocumented evidence from a manager): Undocumented evidence is generally less reliable as it lacks supporting documentation that can be verified.

Detailed Explanation:Why Not Other Options?

The engagement scope outlines the specific boundaries, focus areas, and activities that the internal audit will examine. The analysis of wire transfers exceeding $10,000 within a specified timeframe is a clear, specific task that defines what will be reviewed during the engagement, making it a typical element of an engagement scope.

IIA References:

IIA Standard 2220: Engagement Scope states that the scope must be sufficient to satisfy the engagement's objectives and should outline specific areas and processes to be reviewed. Analyzing transactions over a certain threshold, like wire transfers exceeding $10,000, is a well-defined aspect of what the audit will cover.

The internal auditor has primarily obtained testimonial evidence. Testimonial evidence is derived from interviews, discussions, and responses from employees or other parties. It involves collecting and analyzing verbal information to draw conclusions, which is precisely what the auditor did by conducting interviews, documenting them, analyzing the summaries, and drawing conclusions based on this information.

The rotational model refers to a staffing arrangement where employees, such as internal auditors, are rotated into different roles within the organization, often for a fixed period. In this scenario, a senior internal auditor is hired within the internal audit activity for two years before transitioning to an operations manager role. This model helps in developing a deeper understanding of the organization, broadening skill sets, and fostering cross-functional expertise. It benefits both the internal audit activity and the broader organization by facilitating knowledge transfer and career development.

Vouching is a manual audit procedure where the auditor tests the validity of transactions or records by tracing them backward from the final records to the original source documents. This technique helps verify the authenticity and accuracy of the entries in the accounting records by ensuring that each entry is supported by proper documentation. For example, an auditor might start from an entry in the general ledger and trace it back to the original invoice or receipt to ensure its validity.References:

IIA Global Technology Audit Guide (GTAG) on Understanding and Auditing Big Data

IIA Standard 2310: Identifying Information