DUMPS BASE EXAM DUMPS IIA IIA-CIA-Part2 28% OFF Automatically For You CIA Exam Part Two: Practice of Internal Auditing Study IIA Certified Internal IIA-CIA-Part2 Exam With DumpsBase IIA-CIA-Part2 Dumps V11.02 1.An internal auditor provided the following statement about division A's performance during the month: "Because supplies of raw material X were scarce, division A's profits declined by 15 percent." Which of the following can be validly concluded from the auditor's statement? I. Division A's production level declined by 15 percent. II. Division A could have sold more products than it produced. III. Division A usually sells all of the products that it produces. A. I only B. II only C. III only D. I and II only Answer: B 2.An internal auditor is reviewing a new automated human resources system. The system contains a table of pay rates which are matched to the employee job classifications. The best control to ensure that the table is updated correctly for only valid pay changes would be to: A. Limit access to the data table to management and line supervisors who have the authority to determine pay rates. B. Require a supervisor in the department, who does not have the ability to change the table, to compare the changes to a signed management authorization. C. Ensure that adequate edit and reasonableness checks are built into the automated system. D. Require that all pay changes be signed by the employee to verify that the change goes to a bona fide employee. Answer: B 3.Given the scarcity of internal audit resources, a chief audit executive (CAE) decided not to schedule a follow-up of audit recommendations when developing engagement work schedules. Does the CAE’s decision violate the Standards? A. No, because the Standards do not specify whether follow-up is needed. B. No, because when there is evidence of sufficient motivation by the client, there is no need for follow-up action. C. Yes, because scarcity of resources is not a sufficient reason to omit follow-up action. D. Yes, because the Standards require the auditors to determine whether the client has appropriately implemented all of the auditor's recommendations. Answer: C Study IIA Certified Internal IIA-CIA-Part2 Exam With DumpsBase IIA-CIA-Part2 Dumps V11.02 4.Monetary-unit sampling is most useful when the internal auditor: A. Is testing the accounts payable balance. B. Cannot cumulatively arrange the population items. C. Expects to find several material errors in the sample. D. Is concerned with overstatements. Answer: D 5.If an auditor expects to find numerous discrepancies between recorded values and audited values of sample selections, which sampling technique would be most appropriate? A. Attributes sampling. B. Probability-proportional-to-size sampling. C. Difference estimation sampling. D. Discovery sampling. Answer: C 6.According to the International Professional Practices Framework, which of the following statements is correct regarding the communication of audit results? I. Summary reports may be issued separately from or in conjunction with the final report. II. Interim reports may be written or oral. III. Detailed reports should always be issued to the audit committee. IV. Interim reports should be used to communicate information which requires immediate attention. A. I and III only B. II and IV only C. I, II, and IV only D. I, II, III, and IV. Answer: C 7.Which of the following factors would increase the confidence level in a variables sampling plan? I. A larger sample size. II. A stratified sample. III. A larger standard deviation. A. I and II only B. I and III only C. II and III only D. I, II, and III Study IIA Certified Internal IIA-CIA-Part2 Exam With DumpsBase IIA-CIA-Part2 Dumps V11.02 Answer: A 8.Which of the following might alert an auditor to the possibility of fraud in a division? I. The division is not scheduled for an external audit this year. II. Sales have increased by 10 percent. III. A significant portion of management's compensation is directly tied to reported net income of the division. A. I only B. III only C. I and II only D. I, II, and III Answer: B 9.An organization's internal auditors are reviewing production costs at a gas-powered electrical generating plant. They identify a serious problem with the accuracy of carbon dioxide emissions reported to the environmental regulatory agency, due to computer errors. The auditors should immediately report the concern to: A. The regulatory agency. B. Plant management. C. A plant health and safety officer. D. The risk management function. Answer: B 10.The following is an excerpt from an audit engagement workpaper: ✑ A Company ✑ Accounts Receivable ✑ Date Objective. To determine if the computer system is correctly recording all accounts receivable transactions. Procedures: Judgmental selection of a sample of all accounts receivable balances greater than $50,000 for positive confirmation of balances. Conclusion: Based on the results of testing wherein all but three confirmations were returned, the accounts receivable balance is fairly presented in all material respects. Which of the following is true regarding the workpaper? A. It is not appropriate to judgmentally select a sample when testing accounts receivable. B. A conclusion should be reached only for the results of overall testing, not for individual procedures. C. The audit procedures used are not consistent with the audit objective. Study IIA Certified Internal IIA-CIA-Part2 Exam With DumpsBase IIA-CIA-Part2 Dumps V11.02 D. The format of the workpaper does not conform to the standard format for workpapers. Answer: C 11.A governmental auditor was assigned to determine reasons why the students in one region scored significantly higher on education evaluation tests than did the students in another region. Previous research showed that there is a direct correlation between public financial support and student results. Which of the following is most likely to explain the difference in the regional results? A. The more successful region spends 30 percent more money on education than does the other region. B. A higher percentage of the general tax fund is spent on education in the more successful region than in the other region. C. The more successful region spends more money per student on education than does the other region. D. The more successful region has increased educational spending by an average of 10 percent each year for the last three years, whereas the other region's increase averaged only three percent. Answer: C 12.Which of the following is true of engagement recommendations? I. Specific suggestions for implementation must be included. II. The internal auditor's observations and conclusions may serve as the basis. III. Actions to correct existing conditions or improve operations may be included. IV. Approaches to correcting or enhancing performance may be suggested. A. I only B. III only C. I, III, and IV only D. II, III, and IV only Answer: D 13.An audit department has received anonymous information that an employee has allegedly been able to steal and cash checks sent to the organization by customers. What is the most efficient way for an auditor to determine how this type of fraud could occur and who might be the perpetrator? A. Confirm accounts receivable. B. Confirm accounts payable. C. Review the endorsements and banks of deposit on customers' canceled checks. D. Flowchart and analyze key controls in the cash receipts process. Answer: D Study IIA Certified Internal IIA-CIA-Part2 Exam With DumpsBase IIA-CIA-Part2 Dumps V11.02 14.When assessing the risk associated with an activity, an internal auditor should: A. Determine how the risk should best be managed. B. Provide assurance on the management of the risk. C. Modify the risk management process based on risk exposures. D. Design controls to mitigate the identified risks. Answer: B 15.Which of the following processes real-transaction data through auditor-developed test programs? A. Generalized audit software. B. Tracing. C. Parallel simul-ation. D. Mapping. Answer: C 16.Which of the following would provide the greatest assurance of the accuracy of a computer program's computation of freight charges for catalog sales? A. Use discovery sampling, selecting transactions from invoices which should have freight charges added to them. B. Use either test data or parallel simul-ation to test the computer application. C. Use difference estimation, selecting transactions from invoices which should have freight charges added to them. D. Use generalized audit software to select a monetary-unit sample of invoices that have been billed to customers. Answer: B 17.A company's policy requires that all customers be treated in a fair and consistent manner. Which of the following audit procedures would provide the most persuasive evidence that the policy was followed? A. Compare the aging of outstanding receivables due from each customer. B. Compare credit reports with annual sales for a sample of customers. C. Compare the ratio of outstanding receivables to the authorized credit limit for each customer. D. Compare the sales discounts offered to each customer. Answer: D Study IIA Certified Internal IIA-CIA-Part2 Exam With DumpsBase IIA-CIA-Part2 Dumps V11.02 18.The chief audit executive (CAE) determined that based on management's oral response, the action taken regarding an audit observation was sufficient when weighted against the relative importance of the audit recommendation. Which of the following is the most appropriate step for the internal auditor to take next? A. Initiate a follow-up audit to ensure that action has really been taken. B. Follow-up with management until a written response is obtained. C. Escalate the issue to the board and get their position on the issue. D. Note in the permanent file that follow-up needs to be performed as part of the next engagement. Answer: D 19.In forming a team to investigate an organization's potential adoption of an activity- based costing system, the best reason to include an internal auditor on the team would be the auditor's knowledge of: A. Activities and cost drivers. B. Information processing procedures. C. Current product cost structures. D. Internal control alternatives. Answer: D 20.In a sampling application, the group of items about which the auditor wants to estimate some characteristic is called the. A. Population. B. Attribute of interest. C. Sample. D. Sampling unit. Answer: A 21.Insurance companies often receive electronic hospitalization claims directly from hospitals. Which of the following control procedures would be most effective in detecting fraud in such an environment? A. Use integrated test facilities to test the accuracy of processing in a manner that is transparent to data processing. B. Develop monitoring programs to identify unusual types of claims or an unusual number of claims by demographic class for investigation by the claims department. C. Use generalized audit software to match the claimant identification number with a master list of valid policyholders. D. Develop batch controls over all items received from a particular hospital and Study IIA Certified Internal IIA-CIA-Part2 Exam With DumpsBase IIA-CIA-Part2 Dumps V11.02 process those claims in batches. Answer: B 22.A retail company uses a computer program that matches electronic vendor invoices with the applicable purchase orders and receiving information, which are also maintained electronically. If an invoice does not match the other items within predefined ranges, a report is generated and sent to the accounts payable department for further investigation. All of the applicable documents are electronically marked, cross-referenced, and retained in open files. Both an integrated test facility and a systems control audit review file (SCARF) have been included in the system. An auditor wants to determine the extent to which items are not matched at year end and to investigate the potential causes of the unmatched items. Which of the following audit procedures would be most effective in determining the items to investigate? A. Use generalized audit software to read the electronically marked unmatched items. B. Use generalized audit software to read the purchase orders and trace to applicable receiving and vendor invoice files. C. Use the SCARF to identify unusual items. Select an attributes sample and trace to the underlying documentation. D. Submit test data to identify attributes of unmatched items. Follow up by investigating the identified attributes. Answer: A 23.Which of the following data collection strategies systematically tests the effects of various factors on an outcome? A. Content analysis. B. Sampling. C. Evaluation synthesis. D. Modeling. Answer: D 24.An auditor plans to analyze customer satisfaction, including. (1) customer complaints recorded by the customer service department during the last three months; (2) merchandise returned in the last three months; and (3) responses to a survey of customers who made purchases in the last three months. Which of the following statements regarding this audit approach is correct? A. Although useful, such an analysis does not address any risk factors. B. The survey would not consider customers who did not make purchases in the last three months. Study IIA Certified Internal IIA-CIA-Part2 Exam With DumpsBase IIA-CIA-Part2 Dumps V11.02 C. Steps 1 and 2 of the analysis are not necessary or cost-effective if the customer survey is comprehensive. D. Analysis of three months' activity would not evaluate customer satisfaction. Answer: B 25.In which of the following situations would it be most appropriate to employ the services of a forensic specialist? A. Detection of unauthorized changes to source documents. B. Review for misapplication of general computer controls over accounts receivable. C. Investigation of ghost employees in a large business. D. Verification of fixed assets in a manufacturing company. Answer: A 26.Which of the following would be an appropriate improvement to controls over large quantities of consumable material that are charged to expense when placed in bins which are accessible to production workers? A. Relocate bins to the inventory warehouse. B. Require management to compare the cost of consumable items used to the budget. C. Lock the bins during normal working hours. D. None of the above actions are needed for items of minor cost and size. Answer: B 27.Which of the following situations might allow an employee to steal checks sent to an organization and subsequently cash them? A. Checks are not restrictively endorsed when received. B. Only one signature is required on the organization's checks. C. One employee handles both accounts receivable and purchase orders. D. One employee handles both cash deposits and accounts payable. Answer: A 28.Company A has a formal comprehensive corporate code of ethics while company B does not. Which of the following statements regarding the existence of the code of ethics in company A can be logically inferred? I. Company A exhibits a higher standard of ethical behavior than does company B. II. Company A has established objective criteria by which an employee's actions can be evaluated. III. The absence of a formal corporate code of ethics in company B would prevent a Study IIA Certified Internal IIA-CIA-Part2 Exam With DumpsBase IIA-CIA-Part2 Dumps V11.02 successful audit of ethical behavior in that company. A. II only B. III only C. I and II only D. II and III only Answer: A 29.Many questionnaires are made up of a series of different questions that use the same response categories (for example: strongly agree, agree, neither, disagree, strongly disagree). Some designs will have different groups of respondents answer alternate versions of the questionnaire that present the questions in different orders and reverse the orientation of the endpoints of the scale (for example: agree on the right and disagree on the left). The purpose of such questionnaire variations is to: A. Eliminate intentional misrepresentations. B. Reduce the effects of pattern response tendencies. C. Test whether respondents are reading the questionnaire. D. Make it possible to get information about more than one population parameter using the same questions. Answer: B 30.During an interview with a manager in a company's claims department, an auditor noted that the manager became nervous and changed the subject whenever the auditor raised questions about certain types of claims. The manager's answers were consistent with company policies and procedures. When documenting the interview, the auditor should: A. Document the manager's answers, noting the nature of the nonverbal communication. B. Document the manager's answers but not the nonverbal communication because it is subjective and is not corroborated. C. Conclude that the nonverbal communication is persuasive and that sufficient evidence exists to begin a fraud investigation. D. Disregard the interview entirely because the verbal and nonverbal communications were contradictory. Answer: A 31.An internal auditor would most likely use attributes sampling when testing which of the following? A. Accounts receivable balances. B. Correct coding of accounts payable disbursement vouchers. Study IIA Certified Internal IIA-CIA-Part2 Exam With DumpsBase IIA-CIA-Part2 Dumps V11.02 C. Year-end inventory value. D. Fixed asset book value. Answer: B 32.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? A. To ensure compliance with policies, plans, procedures, laws, and regulations. B. To ensure the accomplishment of established objectives and goals for operations or programs. C. To ensure the reliability and integrity of information. D. To ensure the economical and efficient use of resources. Answer: C 33.An auditor is scheduled to audit payroll controls for a company which has recently outsourced its processing to an information service bureau. What action should the auditor take, considering the outsourcing decision? A. Review the controls over payroll in both the company and the service bureau. B. Review only the company's controls over data sent to and received from the service bureau. C. Review only the controls over payments to the service bureau based on the contract. D. Cancel the engagement because the processing is being performed outside of the organization. Answer: A 34.Which of the following describes an internal auditor's responsibilities to include audit procedures to detect fraud in audits of a multinational organization? A. International Accounting Standards require the internal auditor to include audit procedures which would detect fraud if it would cause a material misrepresentation of the financial statements. B. Internal auditors do not have any specific responsibilities with respect to including fraud-related audit procedures. C. Proper audit procedures, when carried out with due professional care, will guarantee that fraud, if present, will be detected. D. If significant control weaknesses are detected, additional tests should be directed toward other indicators of fraud. Answer: D Study IIA Certified Internal IIA-CIA-Part2 Exam With DumpsBase IIA-CIA-Part2 Dumps V11.02 35.Which of the following would provide the best evidence of compliance with an airline's standard of having aircraft refueled and cleaned within a specified time of arrival at an airport? A. Vendor fuel invoices that have been reconciled to inventory records. B. Time cards completed by aircraft cleaning and fueling crews. C. Observation of selected aircraft while they are being refueled and cleaned. D. Comparison of the standard hourly labor costs for cleaning and fueling personnel with actual labor charges. Answer: C 36.Which of the following is a weakness that is inherent in the use of the test data method to test internal controls in a computer-based accounting system? A. The auditor must test many transactions with the same condition in order to achieve assurance that the condition is being detected. B. Conditions that were not specifically considered by the auditor may go untested. C. The approach requires the creation of "dummy companies," possibly destroying or altering actual company data in the process. D. Inclusion of atypical data in the test data may cause errors to be noted on the exception report. Answer: B 37.A code of ethics within the internal auditing profession is necessary in order to: A. Reduce the likelihood that members of the profession will be sued for substandard work. B. Ensure that all members of the profession perform at approximately the same level of competence. C. Provide guidance to internal auditors in their service to others. D. Require members of the profession to exhibit loyalty in all matters pertaining to the affairs of their organization. Answer: C 38.Which of the following is an example of the verification of internal documentary evidence? A. Reviewing a carrier's bill of lading. B. Reconciling a vendor's month-end statement. C. Vouching a copy of a sales invoice to receivables. D. Recalculating a customer's purchase order. Answer: C Study IIA Certified Internal IIA-CIA-Part2 Exam With DumpsBase IIA-CIA-Part2 Dumps V11.02 39.When internal auditors provide consulting services, the scope of the engagement is primarily determined by: A. Internal auditing standards. B. The audit engagement team. C. The engagement client. D. The internal audit activity's charter. Answer: C 40.During an audit of executive travel, an auditor noted that the president's travel expense reimbursements were approved by an executive secretary who reported to the president. The organization's reimbursement policy requires all travel expense reimbursements to be approved by the traveler's supervisor, but it does not address the president's reimbursements. Which of the following represents the auditor's best recommendation in this situation? A. The organization's reimbursement policy should be amended to grant the president's executive secretary the authority to approve the president's travel expense reimbursements. B. The approval policy for executive travel should be considered at the next meeting of the audit committee of the board of directors. C. The president's travel expense reimbursements should be reviewed and approved by the chief financial officer. D. The president's noncompliance should be considered immaterial. Answer: B 41.Which of the following audit steps would be most effective to review proper recording of and accountability over physical assets? I. Physically inspect all assets on the organization's property. II. Select a sample department and physically inspect assets in the department. III. Select a sample from the organization's records of physical assets and physically locate each asset. IV. Identify assets at a sample of locations and trace to the organization's records. A. I only B. I and IV only C. II and III only D. III and IV only Answer: D 42.An auditor analyzed a payroll system's data files for unusual activity, such as excessive overtime hours, unusual fluctuations in pay rates, and excessive vacation time. Study IIA Certified Internal IIA-CIA-Part2 Exam With DumpsBase IIA-CIA-Part2 Dumps V11.02 The application controls being verified by this analysis are: A. Edit and validation controls. B. Rejected and suspense item controls. C. Controls over update access to the database. D. Programmed balancing controls. Answer: A 43.What would be used to determine the collectability of accounts receivable balances? A. The file of related shipping documents. B. Negative accounts receivable confirmations. C. Positive accounts receivable confirmations. D. An aged accounts receivable listing. Answer: D 44.An internal auditor is discussing an audit problem with an engagement client. While listening to the client, the internal auditor should: A. Prepare a response to the client. B. Take mental notes on the speaker's nonverbal communication, as it is more important than what is being said. C. Make sure that all details, as well as the main ideas of the client, are remembered. D. Integrate the incoming information from the client with information that is already known. Answer: D 45.If an auditor used nonstatistical sampling instead of statistical sampling to estimate the value of inventory, which of the following would be true? A. The confidence level could not be quantified. B. The precision would be larger. C. The projected value of inventory would be less reliable. D. The risk of incorrect acceptance would be higher. Answer: A 46.The most effective way for internal auditors to enhance the reliability of computerized financial and operating information is by: A. Determining if controls over record keeping and reporting are adequate and effective. B. Reviewing data provided by information systems to test compliance with external requirements. Study IIA Certified Internal IIA-CIA-Part2 Exam With DumpsBase IIA-CIA-Part2 Dumps V11.02 C. Determining if information systems provide management with timely information. D. Determining if information systems provide complete information. Answer: A 47.When conducting research, which of the following is most important? A. Using computer databases or the Internet to find all relevant sources. B. Providing documentation of the reference sources. C. Presenting only those facts that support the conclusion. D. Presenting all contrary views to balance the opinion. Answer: B 48.Which of the following is used to identify and prioritize critical business applications to determine those that must be restored and the order of restoration in the event that a disaster impairs information systems processing? A. Contingent facility contract analysis. B. System backup analysis. C. Vendor supply agreement analysis. D. Risk analysis. Answer: D 49.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? A. Investigation of the physical security over access to the components of the LAN. B. The ability of the LAN application to identify data items at the field or record level and implement user access security at that level. C. Interviews with users to determine their assessment of the level of security in the system and the vulnerability of the system to compromise. D. The level of security of other LANs in the company which also utilize sensitive data. Answer: D 50.During an operational audit of a chain of pizza delivery stores, an auditor determined that cold pizzas were causing customer dissatisfaction. A review of oven Study IIA Certified Internal IIA-CIA-Part2 Exam With DumpsBase IIA-CIA-Part2 Dumps V11.02 calibration records for the last six months revealed that adjustments were made on over 40 percent of the ovens. Based on this, the auditor: A. Has enough evidence to conclude that improperly functioning ovens are the cause. B. Needs to conduct further inquiries and reviews to determine the impact of the oven variations on the pizza temperature. C. Has enough evidence to recommend the replacement of some of the ovens. D. Must search for another cause since approximately 60 percent of the ovens did not require adjustment. Answer: B 51.The efficiency of internal audit operations is best enhanced if workpaper standards: A. Permit the extent of documentation to vary according to engagement objectives. B. Require supervisors to initial and date each workpaper that they review. C. Allow access to workpapers by external parties if approved by senior management or the audit committee. D. Mandate the workpaper retention period. Answer: A 52.Direct staff as a percentage of total staff is an example of which of the following types of efficiency measures? A. Productivity ratio. B. Productivity index. C. Operating ratio. D. Resource utilization rate. Answer: C 53.Which of the following will be an appropriate course of action when an auditor disagrees with a client about a well-documented audit finding? A. Include both the audit finding and the client's position in the audit report. B. Defer reporting the item and plan to perform more detailed work during the next audit. C. Change the finding so that it is acceptable to the client. D. Address the issue with senior management and the board for resolution prior to issuing the final report. Answer: A 54.Which of the following would be most helpful to a governmental auditor searching Study IIA Certified Internal IIA-CIA-Part2 Exam With DumpsBase IIA-CIA-Part2 Dumps V11.02 for the existence of multiple welfare claims that were filed under different names but used the same address? A. Tagging and tracing. B. Generalized audit software. C. Integrated test facility. D. Spreadsheet analysis. Answer: B 55.Which sampling plan requires no additional sampling once the first error is found? A. Stratified sampling. B. Attributes sampling. C. Stop-or-go sampling. D. Discovery sampling. Answer: D 56.Which of the following files, when compared with billing records, would provide the best source of information for determining if all goods shipped are billed to customers? A. Pre-numbered customer invoices. B. Accounts receivable transactions. C. Pre-numbered shipping documents. D. Customer purchase orders. Answer: C 57.A manufacturing process could create hazardous waste at several production stages, from raw materials handling to finished goods storage. If the objective of a pollution prevention audit engagement is to identify opportunities for minimizing waste, in what order should the following opportunities be considered? I. Recycling and reuse. II. Elimination at the source. III. Energy conservation. IV. Recovery as a usable product Treatment. A. V, II, IV, I, III. B. IV, II, I, III, V. C. I, III, IV, II, V. D. III, IV, II, V, I. Answer: B 58.Which of the following audit techniques provides for continuous monitoring and Study IIA Certified Internal IIA-CIA-Part2 Exam With DumpsBase IIA-CIA-Part2 Dumps V11.02 analysis of computer transactions for detailed auditing? A. Integrated test facility. B. Parallel simul-ation. C. Test data. D. Embedded audit routines. Answer: D 59.An internal audit activity is participating in the due diligence work for an acquisition that a company is considering. One engagement objective is to determine if the acquisition's accounts payable contain all outstanding liabilities. Which of the following audit procedures would not be relevant for this objective? A. Examine supporting documentation of subsequent (after-period) cash disbursements and verify period of liability. B. Send confirmations, including zero-balance accounts, to vendors with whom the company normally does business. C. Select a sample of accounts payable from the accounts payable list and verify the supporting receiving reports, purchase orders, and invoices. D. Trace receiving reports issued before the period end to the related vendor invoices and accounts payable list. Answer: C 60.Which of the following would constitute a violation of the IIA Code of Ethics? A. An internal auditor, who has recently joined the organization, has accepted an assignment to audit the electronics manufacturing division. The auditor previously served as senior auditor for the external audit of that division and has audited many electronics companies during the past two years. B. An internal auditor has accepted an assignment to audit the warehousing function six months from now. The auditor has no expertise in that area but has signed up for courses in warehousing that will be completed before the assignment begins. C. An internal auditor has no ambitions for promotion and has not engaged in training or other professional development activities during the last three years. The auditor's performance assessments indicate consistent quality of work. D. An internal auditor discovered an internal financial fraud during the year, and the financial statements were adjusted to properly reflect the loss associated with the fraud. The auditor discussed the fraud with the external auditor during the external auditor's review of the working papers detailing the incident. Answer: C 61.An auditor prepared a workpaper that consisted of a list of employee names and identification numbers as well as the following statement: Study IIA Certified Internal IIA-CIA-Part2 Exam With DumpsBase IIA-CIA-Part2 Dumps V11.02 “A statistical sample of 40 employee personnel files was selected to verify that they contain all documents required by company policy 501 (copy attached). No exceptions were noted.” The auditor did not place any audit verification symbols on this workpaper. Which of the following changes would most improve the auditor's workpaper? A. Use of audit verification symbols to show that each file was examined. B. Removal of the employee names to protect their confidentiality. C. Justification for the sample size. D. Listing of the actual documents examined for each employee. Answer: C 62.Which of the following, if observed, would not indicate the need to extend the search for other indicators of fraud in a purchasing department? A. The standard of living of one of the purchasing agents has increased. B. The internal control structure has significant weaknesses. C. The purchasing agents have convinced management to adopt a policy of paying vendors on a more timely basis in order to avoid incurring penalty charges. D. The cost of goods procured seems to be excessive in comparison with previous years. Answer: C 63.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. Verify that the change orders were properly approved by management. A. I only B. III only C. I and II only D. I and III only Answer: C 64.Which of the following would be a red flag that indicates the possibility of inventory fraud? I. The controller has assumed responsibility for approving all payments to certain vendors. Study IIA Certified Internal IIA-CIA-Part2 Exam With DumpsBase IIA-CIA-Part2 Dumps V11.02 II. The controller has continuously delayed installation of a new accounts payable system, despite a corporate directive to implement it. III. Sales commissions are not consistent with the organization's increased levels of sales. IV. Payments to certain vendors are supported by copies of receiving memos, rather than originals. A. I and II only B. II and III only C. I, II, and IV only D. I, III, and IV only Answer: C 65.Access control software on an organization's mainframe computer records detailed information concerning both successful and unsuccessful log-on attempts to applications. Which of the following audit tools would be best suited to review the access information that has been recorded? A. Generalized audit software. B. Flowcharting. C. Integrated test facility. D. Test data. Answer: A 66.An auditor receives anonymous information that fraud is occurring in the operation being audited, but no details are given as to the type of fraud or the individuals involved. There are several areas in which fraud could occur. The auditor should: A. Identify the area that has the greatest volume of transactions and design a sampling plan for substantive testing. B. Apply analytical procedures to areas that might be impacted by possible fraudulent activities. C. Interview employees to identify areas where the fraud could be occurring. D. Plan detailed tests of the areas that have the highest dollar amount of transactions. Answer: B 67.Which of the following procedures would provide the best evidence of the effectiveness of a credit-granting function? A. Observe the process. B. Review the trend in receivables write-offs. C. Ask the credit manager about the effectiveness of the function.