IIA-CIA-Part2-demo

IIA
IIA-CIA-PART2
Certified Internal Auditor - Part 2
Demo Product
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Question: 1
An auditor, assigned to review a complex computer system that had undergone a few system
changes, obtained the prior flowchart used. Which of the following would be the most efficient way
to document the changes?
A. Create a new flowchart reflecting the system changes.
B. Prepare a detailed narrative instead of a flowchart to describe the updated system.
C. Add a detailed narrative to the prior flowchart to describe the changes to the system.
D. Make the necessary adjustments on a copy of the prior flowchart and save as a new version.
Question: 2
When interrogating an individual who is suspected of fraud, it is appropriate to
Question: 3
Question: 4
Answer: D
A. Tell the individual that any information disclosed in the interrogation will not be disclosed outside
of the company.
B. Start the interview with questions to which the interviewer already knows the answer.
C. Discontinue questioning once the individual has confessed to the fraud.
D. Prepare a list of questions prior to the interrogation and strictly adhere to the list.
Answer: B
Which of the following is typically not a reason for committing financial statement fraud?
A. To dispel negative market perception.
B. To disguise a duplicate payment to a vendor.
C. To obtain more favorable terms on financing.
D. To receive performance related bonuses.
Answer: B
A company regularly invests excess short-term cash in trading securities. A reliable test of the
valuation of those securities would be a
A. Recalculation of investment carrying value using the equity method.
B. Comparison of cost data with current market quotations.
C. Confirmation of securities held by the broker.
D. Calculation of premium or discount amortization.

Answer: B
Question: 5
Which of the following sampling plans should an internal auditor use to estimate the number of units
in a certain class of inventory without counting each item?
A. Attributes sampling.
B. Discovery sampling.
C. Variables sampling.
D. Stop or go sampling.
Question: 6
Which of the following is an example of sampling risk?
A. Overlooking material errors.
B. Failing to analyze results properly.
C. Checking invoices that are not representative of the population.
D. Using audit procedures that are not appropriate for the given audit objective.
Question: 7
Which of the following would constitute a violation of the IIA Code of Ethics?
Question: 8
Answer: C
Answer: C
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
A staff auditor, nearly finished with an audit engagement, discovers that the director of marketing

has a gambling habit. The gambling issue is not directly related to the existing engagement and there
is pressure to complete the current engagement. The auditor notes the problem and forwards the
information to the chief audit executive but performs no further followup. The auditor's actions
would
I. Be in violation of the IIA Code of Ethics for withholding meaningful information.
II. Be in violation of the Standards because the auditor did not properly follow up on a red flag that
might indicate the existence of fraud.
III. Not be in violation of either the IIA Code of Ethics or Standards.
A. I only.
B. II only.
C. III only.
D. I and II only.
Question: 9
A code of ethics within the internal auditing profession is necessary in order to
Question: 10
Answer: C
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
An investment portfolio manager has the authority to use financial derivatives to hedge transactions
but is not supposed to take speculative positions. However, the manager launches a scheme which
includes
(1) taking a position larger than required by the hedge;
(2) putting the speculative gains in a suspense account; and
(3) transferring the funds to a nonexistent broker and from there to a personal account. Which of the
following audit procedures would be least effective in detecting this fraud?
A. Select a sample of individual trades and examine to determine whether the trades violate the
authorization limit for the manager.
B. Select a sample of individual trades and determine the exact matching of the hedge. Schedule and
investigate all differences.
C. Select a sample of all debits to the suspense account and examine their disposition.
D. Select a sample of fund transfers to brokers and determine if the brokers are on the authorized list
for company transactions.
Answer: A

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