[Feb 25, 2026] IIA-CIA-Part2 Dumps Full Questions - Exam Study Guide
Certified Internal Free Certification Exam Material from Free4Torrent with 712 Questions
IIA-CIA-Part2 exam contains 100 multiple-choice questions and has a time limit of two and a half hours. IIA-CIA-Part2 exam covers four domains: Managing the Internal Audit Function, Planning the Engagement, Performing the Engagement, and Communicating Engagement Results and Monitoring Progress. Candidates must score a minimum of 600 points out of a possible 750 to pass the exam.
NEW QUESTION # 96
Which of the following situations is most critical for the chief audit executive to report to the board?
- A. The internal audit activity was restructured, which resulted in a significant change in responsibilities among audit managers and supervisors for some audits
- B. The resignation of an internal audit manager during the year caused the chief audit executive to defer a number of audit engagements to the following year.
- C. The chief audit executive disagreed with the business unit manager's initial decision to accept a particular risk Management ultimately agreed to address the risk only after discussing the issue with senior management.
- D. A staff internal auditor had difficulties completing a portion of the audit because management of the area under review was unwilling to cooperate and provide information timely.
Answer: C
Explanation:
The most critical situation for the chief audit executive (CAE) to report to the board is the disagreement with the business unit manager's initial decision to accept a particular risk, which was only addressed after discussion with senior management. This situation is critical because it involves a risk that was initially accepted without proper mitigation, which could have significant implications for the organization. Reporting this to the board ensures that they are aware of potential disagreements regarding risk acceptance and management's approach to risk mitigation.
References:
* IIA Standards: 2060 - Reporting to Senior Management and the Board
* IIA Practice Guide: Reporting to the Board and Senior Management
NEW QUESTION # 97
Which of the following is a true statement regarding whistleblowing?
- A. Whistleblowing programs help employees deal with ethical questions and instill ethical values into everyday behavior
- B. Whistleblowers are current or former employees who are disgruntled and looking to retaliate.
- C. Whistleblowing is one of several possible ethical structures an organization can undertake to encourage ethical behavior.
- D. Whistleblowers should inform the organization about actual criminal circumstances, not assumed allegations.
Answer: C
Explanation:
* Purpose of Whistleblowing: Whistleblowing is a mechanism that allows employees to report unethical or illegal activities within the organization. It is a vital part of an organization's ethical framework, providing a structured way for concerns to be raised and addressed.
Reference: IIA's Practice Guide on Whistleblowing Programs.
Encouraging Ethical Behavior: By having a whistleblowing program, an organization encourages employees to come forward with concerns, which helps in maintaining ethical standards and preventing misconduct.
Practical Example: Employees who notice financial discrepancies can report these through the whistleblowing system without fear of retaliation, supporting a culture of transparency and accountability.
Other Options Considered:
Option B: While whistleblowing programs can support ethical behavior, they are primarily designed for reporting issues rather than instilling values.
Option C: This is a misconception; whistleblowers often report genuine concerns rather than acting out of retaliation.
Option D: Whistleblowers can report suspected unethical or illegal activities, which may not always be criminal but are still significant for organizational integrity.
Conclusion: The correct answer is A, as whistleblowing is one of several ethical structures that organizations can adopt to encourage reporting of unethical behavior and maintain high ethical standards.
NEW QUESTION # 98
'Internal policy prohibits employees from entering into contacts with financial obligations without proper approval.
A project manager signed a change to an important service agreement without obtaining the proper approval As a result the organization is receiving $5,000 per month less for its services.'' Which of the following should be added to the observation?
- A. The annual impact of the changed agreement on cash flows
- B. The reason for not following the internal policy
- C. A description of what constitutes proper approval
- D. Details regarding when the change to the agreement was signed
Answer: A
Explanation:
Including the annual impact of the changed agreement on cash flows in the observation provides a clear quantification of the financial effect of the policy violation. This information is critical for understanding the significance of the issue and for decision-making regarding corrective actions. It shows the long-term implications of the unauthorized contract change, which is essential for management and the board to assess the severity of the non-compliance and its impact on the organization's financial health.
The Institute of Internal Auditors (IIA) - Practice Guide: Formulating and Expressing Internal Audit Opinions
NEW QUESTION # 99
Which of the following best describes the guideline for preparing audit engagement workpapers?
- A. Workpapers should be understandable to another internal auditor who was not involved in the engagement.
- B. Workpapers should be understandable to the auditor in charge and the chief audit executive
- C. Workpapers should be understandable to external auditors and regulatory agencies
- D. Workpapers should be understandable to the audit client and the board.
Answer: A
Explanation:
The guidelines for preparing audit engagement workpapers emphasize clarity, completeness, and accuracy to ensure that they can be easily understood and used by others within the auditing function.
* Option A: Workpapers should be understandable to the auditor in charge and the chief audit executive.
* While workpapers must indeed be clear to the auditor in charge and the chief audit executive, this guideline does not fully capture the broader requirement for understandability to other auditors.
* Option B: Workpapers should be understandable to the audit client and the board.
* Although transparency with the audit client and the board is important, workpapers are primarily internal documents used to support the audit process and conclusions.
* Option C: Workpapers should be understandable to another internal auditor who was not involved in the engagement.
* This is the most comprehensive requirement, ensuring that any internal auditor, even if not originally involved, can review the workpapers, understand the procedures performed, and the conclusions reached. This is crucial for maintaining continuity, quality control, and facilitating reviews or future audits.
* Option D: Workpapers should be understandable to external auditors and regulatory agencies.
* While external auditors and regulatory agencies may review workpapers, the primary audience is internal auditors, who need to ensure the workpapers are detailed and clear enough for effective internal use and review.
Reference:
According to the Institute of Internal Auditors (IIA) International Standards for the Professional Practice of Internal Auditing (Standards), Standard 2330 - "Documenting Information," internal auditors must document relevant information to support the conclusions and engagement results. The documentation must be sufficiently detailed to allow another internal auditor with no previous connection to the engagement to understand the work performed, evidence obtained, and conclusions reached.
NEW QUESTION # 100
With which of the following would the internal audit activity discuss findings, conclusions and recommendations prior to issuance of internal audit report?
1. Business unit management.
2. Chief audit executive.
3. Audit committee.
4. Chief executive officer.
- A. 1, 2, 3, and 4
- B. 2 and 3 only
- C. 1 and 3 only
- D. 1 and 2 only
Answer: D
Explanation:
Section: Volume C
NEW QUESTION # 101
According to IIA guidance which of the following statements is true regarding the annual audit plan?
- A. The chief audit executive (CAE) may incorporate risk information, including risk appetite levels from management for the audit plan at her discretion.
- B. The annual audit plan should only be adjusted in response to problems with resourcing, scope, and data availability.
- C. In an immature risk management environment it is preferable for the CAE to rely solely on her judgment regarding risk identification and assessment to develop the audit plan.
- D. The CAE may make adjustments to the annual audit plan as needed without senior management or board approval.
Answer: A
Explanation:
According to the Institute of Internal Auditors (IIA) guidance, the chief audit executive (CAE) should develop a risk-based audit plan that takes into account the organization's risk management framework, including its risk appetite levels. This aligns with Standard 2010 - Planning, which states that the CAE must establish a risk-based plan to determine the priorities of the internal audit activity, consistent with the organization's goals. Risk appetite levels from management are a critical component of understanding the organization's risk profile and should be incorporated into the audit plan. Thus, the CAE may incorporate risk information, including risk appetite levels from management, at her discretion.
IIA's International Standards for the Professional Practice of Internal Auditing, Standard 2010 - Planning.
NEW QUESTION # 102
What is the most likely source of information for a detailed schedule of a company's insurance policies in force?
- A. The files containing insurance policies with various carriers.
- B. Policies and procedures governing insurance coverage.
- C. The current fiscal year's budget for insurance, together with the beginning balance of the prepaid insurance account.
- D. Original journal entries found in the cash disbursements journal, along with supporting checks processed by the bank.
Answer: A
NEW QUESTION # 103
Which of the following is one of the five basic tnanoal statement assertions when an internal auditor evaluates controls over financial reporting?
- A. Existence or occurrence
- B. Relevance
- C. Reliability or appropriateness
- D. Reasonableness
Answer: A
Explanation:
One of the five basic financial statement assertions that an internal auditor evaluates when assessing controls over financial reporting is "existence or occurrence." This assertion verifies that assets, liabilities, and equity interests actually exist at a given date, and that recorded transactions have actually occurred during a given period. It ensures that the financial statements are not overstated through the inclusion of fictitious or erroneous items.
References:
* COSO Framework
* PCAOB Auditing Standard No. 15: Audit Evidence
NEW QUESTION # 104
Which informal ion- gathering method would be most efficient for an internal auditor to determine whether specified control procedures are in place?
- A. Reperformance
- B. Interviews
- C. Internal control questionnaires
- D. Observations
Answer: C
NEW QUESTION # 105
Which of the following would most likely include recommendations for process improvements?
----
Due diligence engagement. Forensic investigation. Internal audit engagement. Consulting engagement.
- A. 2, 3, and 4 only.
- B. 1, 3, and 4 only.
- C. 1, 2, and 4 only.
- D. 1, 2, and 3 only.
Answer: A
NEW QUESTION # 106
According to IIA guidance, when would an interim report typically be produced?
- A. During lengthy audit engagements involving several organizational units.
- B. Following management's update tor actions taken on outstanding recommendations.
- C. During a standard audit engagement when management wants to address an issue before the final report is drafted.
- D. Following each workshop conducted during a consulting engagement.
Answer: A
Explanation:
According to IIA guidance, interim reports are typically produced during lengthy audit engagements that involve several organizational units. These reports help keep management informed about the progress of the audit, highlight any significant issues identified early on, and allow for timely corrective actions. Interim reports facilitate communication between the internal audit activity and management, ensuring that any critical issues are addressed promptly rather than waiting for the final report.
:
The Institute of Internal Auditors (IIA) Practice Guide on "Audit Reports" IIA Standard 2410 - Criteria for Communicating: "Interim reports may be used to communicate information and issues that require immediate attention."
NEW QUESTION # 107
Which of the following evaluation criteria would be the most useful to help the chief audit executive determine whether an external service provider possesses the knowledge, skills, and other competencies needed to perform a review?
- A. Compensation or other incentives that may be applicable to the service provider.
- B. The service provider's experience in the type of work being considered.
- C. The financial interest the service provider may have in the organization.
- D. The relationship the service provider may have had with the organization or the activities being reviewed.
Answer: B
NEW QUESTION # 108
Which of the following statements is true regarding the communication of audit engagement observations?
- A. Criteria, condition, cause, and effect do not need to be communicated for insignificant observations with adquate compensating key controls.
- B. Criteria, condition, cause, and effect must be communicated for material observations and significant deficiencies only
- C. Criteria, condition, cause, and effect must be communicated for material observations only
- D. Criteria, condition, cause, and effect must be communicated for all engagement observations.
Answer: D
NEW QUESTION # 109
Which of the following factors could interfere with effective problem solving by an internal auditor?
I.Reacting to previous experiences with clients.
II.
Focusing only on the most likely cause.
III.
Correcting the symptoms of problems.
- A. I and II only.
- B. I only.
- C. III only.
- D. I, II, and III.
Answer: D
NEW QUESTION # 110
An internal auditor has discovered that duplicate payments were made to one vendor. Management has recouped the duplicate payments as a corrective action. Which of the following describes management's action in this case?
- A. An effect-based action plan.
- B. A root cause-based action plan.
- C. A cause-based action plan.
- D. A condition-based action plan.
Answer: A
Explanation:
Management's action to recoup the duplicate payments made to a vendor is an effect-based action plan because it directly addresses the outcome (the duplicate payment) rather than the underlying cause that allowed the error to occur. An effect-based action plan focuses on correcting the issue's immediate consequences but does not necessarily address the root cause that led to the issue in the first place.
IIA References:
* IIA Standard 2500: Monitoring Progress emphasizes that internal auditors should monitor the disposition of audit recommendations. Addressing only the effects of an issue, like in this case, might provide a temporary fix but does not prevent future occurrences if the underlying causes are not identified and corrected.
NEW QUESTION # 111
Which of the following steps should an internal auditor complete when conducting a review of an electronic data interchange application provided by a third-party service?
Ensure encryption keys meet ISO standards.
Determine whether an independent review of the service provider's operation has been conducted.
Verify that the service provider's contracts include necessary clauses.
Verify that only public-switched data networks are used by the service provider.
- A. 2 and 4.
- B. 1 and 4.
- C. 1 and 3.
- D. 2 and 3.
Answer: D
Explanation:
When conducting a review of an electronic data interchange (EDI) application provided by a third-party service, it is essential to determine whether an independent review of the service provider's operation has been conducted and to verify that the service provider's contracts include necessary clauses. These steps ensure that the service provider operates securely and meets the organization's requirements for data protection and service reliability.
IIA Reference:
IIA Standard 2100: Nature of Work indicates that internal audit should evaluate the adequacy and effectiveness of controls, including those at third-party service providers. Verifying that an independent review has been conducted and ensuring that contracts contain the necessary clauses are critical steps in assessing these controls.
The Practice Guide on Third-Party Risk Management advises internal auditors to review the service provider's contractual agreements and independent audit reports to assess the adequacy of controls and compliance with standards.
NEW QUESTION # 112
Which of the following analytical procedures should an internal auditor use to determine whether monthly expenses for the accounting department are reasonable?
- A. Review total expenses for accounting against other department expenses in the organization.
- B. Review year-over-year trending of total dollars spent in each period.
- C. Review changes to the vendor master file for suspicious activity.
- D. Review the percentage of on-time payments against prior periods.
Answer: B
Explanation:
* A. Review year-over-year trending of total dollars spent in each period:This is the correct approach because year-over-year analysis focuses on identifying anomalies or significant variances in expenses over time. Trends in data can help detect unexpected spikes, dips, or patterns that indicate irregularities or inefficiencies. This aligns with analytical procedures in expense analysis under the CIA Exam Syllabus Part 2, which emphasizes the use of comparative techniques to evaluate reasonableness.
* B. Review changes to the vendor master file for suspicious activity:While reviewing vendor master file changes is essential for fraud detection and control testing, it does not directly help in determining the reasonableness of monthly expenses.
* C. Review the percentage of on-time payments against prior periods:Examining payment timeliness relates to operational efficiency and cash flow management, not directly to evaluating whether monthly expenses are reasonable.
* D. Review total expenses for accounting against other department expenses in the organization:
Comparing accounting department expenses to those of other departments might indicate disparities but does not consider differences in department-specific activities and needs.
CIA Exam Syllabus Reference:
Domain V: Performing Internal Audit Services - Analytical Procedures and Testing Methods.
NEW QUESTION # 113
A film company determined that income level impacts the number of films that people watch per month, as shown by the graph below:
The graph indicates that:
- A. A richer person always sees more films than a poorer person.
- B. The number of films seen per month is a linear function of income level.
- C. A 20 percent pay increase is likely to increase film viewing by a constant amount regardless of income level.
- D. A 20 percent pay increase is more likely to increase film viewing at lower income levels than at higher income levels.
Answer: D
NEW QUESTION # 114
Upon the completion of an audit engagement an audit manager performs a review of a staff auditor's workpapers. Which of the following actions by the manager is the most appropriate this review''
- A. Communicate the workpaper review results to management of fie area under review to validate the final report
- B. Update the final report in the file with any necessary corrections based on the workpaper review.
- C. Discuss the workpaper review results with the staff auditor where appropriate as a leaning opportunity
- D. Add the manager's review notes to the final documentation following the review
Answer: C
Explanation:
When a manager reviews a staff auditor's workpapers, the primary goal is to ensure the accuracy and completeness of the audit documentation and to provide feedback for professional development. Discussing the workpaper review results with the staff auditor helps identify any areas for improvement and reinforces best practices, making it a valuable learning opportunity. This collaborative approach promotes continuous improvement and skill development within the audit team.References:
* The Institute of Internal Auditors (IIA) - Standards for the Professional Practice of Internal Auditing, Standard 2340 - Engagement Supervision
NEW QUESTION # 115
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IIA-CIA-Part2 certification exam, also known as the Practice of Internal Auditing, is a globally recognized certification offered by the Institute of Internal Auditors (IIA). Practice of Internal Auditing certification is designed for internal auditors who are looking to enhance their knowledge and expertise in the field of internal auditing. IIA-CIA-Part2 exam covers a wide range of topics, including risk management, governance, fraud, and ethics, among others.
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