[Mar 22, 2026] New Real IIA-CIA-Part2 Exam Dumps Questions
Pass Your IIA-CIA-Part2 Exam Easily with Accurate Practice of Internal Auditing PDF Questions
IIA-CIA-Part2 exam covers a wide range of topics related to internal auditing, including internal control and risk management, fraud detection and prevention, governance and ethics, and communication skills. IIA-CIA-Part2 exam consists of 100 multiple-choice questions, which must be completed within 2.5 hours. To pass the exam, candidates must achieve a minimum score of 600 out of a possible 800 points.
NEW QUESTION # 162
During the review of an organization's retail fraud deterrence program, an employee mentions that an expensive fraud surveillance information system is rarely used. The internal auditor concludes that additional staff are required to properly utilize the system to its full potential. According to IIA guidance, which criteria for evidence is most lacking to reach this conclusion?
- A. Sufficiency.
- B. Reliability.
- C. Usefulness.
- D. Relevancy.
Answer: A
Explanation:
In internal auditing, evidence must meet certain criteria to support conclusions and recommendations. According to IIA guidance, evidence should be sufficient, reliable, relevant, and useful. In this scenario, the internal auditor concludes that additional staff are needed to fully utilize a fraud surveillance system based on an employee's statement. However, the conclusion may lack sufficient evidence to support it.
Detailed Explanation:
IIA Standard 2310 - Identifying Information:
This standard requires that internal auditors identify sufficient, reliable, relevant, and useful information to achieve the engagement's objectives. "Sufficiency" refers to the quantity of evidence necessary to convince an informed person of the validity of the auditor's findings and recommendations.
Sufficiency of Evidence:
The auditor's conclusion about the need for additional staff is based on a single employee's remark, which is not sufficient evidence. The auditor would need to gather more evidence, such as analyzing workload data, reviewing system logs, or assessing staff capacity, to support the conclusion fully.
IIA Practice Advisory 2310-1:
This advisory emphasizes the need for auditors to obtain enough factual evidence to support their findings. Relying solely on anecdotal evidence from one employee does not meet the standard for sufficiency.
Why Not Other Options?
Option B (Reliability): Reliability refers to the accuracy and credibility of the evidence. The employee's statement might be credible but still insufficient in quantity.
Option C (Relevancy): The employee's comment is relevant to the issue, but relevancy alone does not make the evidence sufficient.
Option D (Usefulness): The information could be useful, but it lacks the sufficiency needed to justify the auditor's conclusion.
NEW QUESTION # 163
According to IIA guidance, which of the following statements is false regarding a review of the controls in place to prevent fraud?
- A. The scope of the review does not need to include all operating areas of the organization.
- B. The review should focus on the efficiency of the controls in place to prevent fraud.
- C. The review should assess whether the internal controls can be circumvented.
- D. The cost of the control should be compared to the benefit of mitigating the related risk.
Answer: B
Explanation:
According to IIA guidance, the focus of a review of controls to prevent fraud should be on the effectiveness rather than the efficiency of the controls. Effectiveness pertains to whether the controls adequately mitigate fraud risks and prevent fraudulent activities, while efficiency focuses on the performance and cost- effectiveness of the controls, which is not the primary concern in preventing fraud. This makes statement A false in the context of IIA guidance.
IIA Standards: 1220.A1 - Due Professional Care
IIA Practice Guide: Fraud Prevention and Detection in an Automated World
NEW QUESTION # 164
According to an internal audit observation, the organization's rules of record management require all contracts to be registered and stored in a specific electronic system. One subsidiary has thousands of client contracts on paper, which are kept in the office because there are not enough assistants to scan the contracts into the system. Which of the following component should be added to this observation?
- A. Cause
- B. Condition
- C. Criteria
- D. Effect
Answer: A
Explanation:
In the context of an internal audit observation, the cause component should be added to explain why the subsidiary has thousands of client contracts on paper instead of in the required electronic system. The cause helps identify the root reason behind the non-compliance with the organization's rules of record management.
In this case, the cause could be the lack of sufficient assistants to scan the contracts into the system. Including the cause in the observation provides clarity on the underlying issues and helps in formulating effective recommendations to address the problem.
:
The Institute of Internal Auditors (IIA) Standard 2410.A1 - Criteria for Communicating: "Final communication of engagement results must, where appropriate, contain the internal auditors' overall opinion and/or conclusions." IIA Practice Guide on "Root Cause Analysis"
NEW QUESTION # 165
According to IIA guidance, when of the Mowing statements is true regarding an engagement supervisor's use of review notes?
- A. The engagement supervisor's review notes should be retained m the final documental or even after they are addressed.
- B. The engagement supervisor's review notes cannot be used as evidence of engagement supervision
- C. The engagement supervisor's review notes must be maintained in a checklist separate from tie final documentation
- D. The engagement supervisor's review notes could be cleared from all final documentation after they are addressed
Answer: D
Explanation:
According to the IIA guidance, engagement supervisors' review notes are used during the audit process to ensure thoroughness and accuracy. Once these review notes have been addressed, they can be removed from the final documentation. This practice ensures that the final audit report is clear and concise, containing only the necessary documentation to support audit findings and conclusions. The review notes are considered part of the working papers during the review process but do not need to be retained in the final audit documentation once all issues have been resolved.
References:
* The Institute of Internal Auditors (IIA) Standard 2330 - Documenting Information: "Internal auditors must document relevant information to support the conclusions and engagement results."
* IIA Practice Guide on "Audit Documentation"
NEW QUESTION # 166
Which of the following is a detective control for managing the risk of fraud?
- A. Awareness of prior incidents of fraud.
- B. Contractor non-disclosure agreements.
- C. Verification of currency exchange rates.
- D. Receipts for employee expenses.
Answer: D
Explanation:
Detective controls are designed to identify and detect errors or fraud after they have occurred. Receipts for employee expenses serve as a detective control by providing evidence of transactions, enabling verification and review of expenses to identify any fraudulent or unauthorized activities. Awareness of prior incidents of fraud (Option A) is more of a preventive control, contractor non-disclosure agreements (Option B) are preventive controls to mitigate risks of information leakage, and verification of currency exchange rates (Option C) is more of a transaction control. References: IIA Glossary - Detective Controls, COSO Framework
NEW QUESTION # 167
Acceding to MA guidance, when of the Mowing strategies would like provide the most assurance to the chief audit executive (CAE) that the internal audit activity's recommendations are being acted upon?
- A. The CAF obtains a formal response from senior management regarding the corrective actions they plan to take w address the recommendations.
- B. The CAE communicates with impacted department managers to determine whether corrective actions have addressed engagement recommendations
- C. The CAE develops a tracking system to monitor the stains of engagement recommendations reported to management for action
- D. The CAE works with the engagement supervisor to monitor the recommendations issued to management for corrective action
Answer: C
Explanation:
Developing a tracking system to monitor the status of engagement recommendations ensures that the chief audit executive (CAE) can systematically track the progress and implementation of corrective actions. This approach provides continuous assurance that recommendations are being acted upon and allows the CAE to identify and address any delays or issues in the implementation process. It is a proactive strategy that enables regular follow-ups and reporting to senior management, thus maintaining accountability and transparency.
Reference:
The Institute of Internal Auditors (IIA) - Standards for the Professional Practice of Internal Auditing, Standard 2500 - Monitoring Progress
NEW QUESTION # 168
Which of the following technologies will best reduce human processing errors and enable seamless exchange of business transactions among business partners?
- A. Enterprise resource planning
- B. Customer relationship management
- C. Material requirements planning
- D. Electronic data interchange
Answer: D
Explanation:
Comprehensive and Detailed Explanation:
Electronic Data Interchange (EDI) automates the structured exchange of business documents (e.g., invoices, purchase orders) between organizations without human intervention. This reduces manual processing errors and accelerates transaction flow, ensuring seamless integration with business partners.
* ERP (A) integrates internal functions but does not directly enable partner-to-partner exchange.
* MRP (B) focuses on production and material planning.
* CRM (D) manages customer relationships but not transactional data exchange.
Therefore, the best technology to reduce errors and facilitate seamless inter-organizational transactions is EDI (C).
NEW QUESTION # 169
Which of the following statements describes an engagement planning best practice?
- A. The engagement plan includes the expected distribution of the audit results, which should be kept confidential until the audit report is final.
- B. If the engagement subject matter is not unique, it is not necessary to outline specific testing procedures during the planning phase.
- C. It is best to determine planning activities on a case-by-case basis because they can vary widely from engagement to engagement.
- D. Engagement planning activities include setting engagement objectives that align with audit client's business objectives.
Answer: D
Explanation:
Best practices for engagement planning involve setting objectives that align with the business objectives of the audit client. This ensures that the audit is relevant and provides valuable insights to the organization. Planning should also be systematic and documented, ensuring that specific testing procedures and expected outcomes are outlined and communicated. References: = IIA Standard 2200 - Engagement Planning and IIA Practice Guide: "Planning the Engagement".
NEW QUESTION # 170
An internal auditor completed a consulting engagement covering a recent advertising campaign. The audit client asked the auditor to forward a copy of the report to one of the three advertising agencies used by the organization. According to IIA guidance, which of the following statements is true regarding this request?
- A. The internal auditor may only communicate the results verbally to the advertising agency and should not provide a hard copy.
- B. The internal auditor may communicate the results to the advertising agency as instructed by the audit client, with approval from the chief audit executive.
- C. The internal auditor may not communicate the results to this external party regardless of the engagement client's instruction.
- D. The internal auditor may send the report and is required to include instructions for the advertising agency to limit further distribution and the use of results.
Answer: B
Explanation:
When dealing with the communication of audit results to external parties, the internal auditor must adhere to IIA standards regarding confidentiality, approval processes, and the appropriate handling of sensitive information.
* IIA Standard 2440 - Disseminating Results:
* This standard outlines that the chief audit executive (CAE) must approve the communication of engagement results to parties outside the organization. The CAE is responsible for ensuring that the distribution of audit findings is appropriate and does not compromise confidentiality or integrity.
* Confidentiality and Authorization:
* The internal auditor must protect the confidentiality of the information obtained during the audit.
Sharing this information with external parties, such as an advertising agency, should only occur with proper authorization, typically from the CAE.
* IIA Code of Ethics - Confidentiality:
* The Code of Ethics requires auditors to respect the value and ownership of information they receive and to not disclose information without appropriate authority. In this case, if the audit client requests the report to be shared with an external party, the internal auditor must first obtain approval from the CAE to ensure this disclosure is appropriate.
* Option B (May not communicate results): While confidentiality is crucial, the CAE can authorize the sharing of information with external parties if it is deemed appropriate.
* Option C (Include instructions for limited distribution): While limiting further distribution is a good practice, the initial sharing still requires the CAE's approval.
* Option D (Verbal communication only): This restricts the auditor unnecessarily. The key is obtaining proper authorization, not limiting the form of communication.
Detailed Explanation:Why Not Other Options?Conclusion: Option A is correct as it ensures that the results can be communicated to the external party with the appropriate approval from the CAE, in line with IIA standards on dissemination and confidentiality.
NEW QUESTION # 171
An internal audit activity has to confirm the validity of the activities reported by a grantee that received a charitable contribution from the organization. Which of the following methods would best help meet this objective?
- A. Reconciling general ledger accounts used by management of the area under review for reflecting expenses on charitable contributions.
- B. Visiting the grantee to assess whether the execution of the project was in line with the defined grant scope.
- C. Interviewing employees of the corporate affairs department, which is responsible for charitable activities.
- D. Verifying that the grantee's final report is in line with what was depicted in the initial budget request.
Answer: B
Explanation:
by a grantee that received a charitable contribution, the most effective method is to visit the grantee and directly assess whether the project execution aligns with the scope defined in the grant. This method provides firsthand evidence of the grantee's activities and ensures that the charitable contributions are used as intended.
Detailed Explanation:
IIA Standard 2310 - Identifying Information:
This standard requires that internal auditors gather sufficient, reliable, relevant, and useful information to achieve the engagement objectives. Visiting the grantee allows auditors to observe and verify the actual execution of the project, which provides the most direct and reliable evidence.
Field Visits:
Conducting a site visit enables auditors to see the project in action, interview relevant personnel, and compare actual activities to what was promised in the grant proposal. This method helps ensure that the grantee is fulfilling its obligations and that the organization's charitable funds are being used effectively.
Direct Evidence:
Direct observation of the grantee's activities provides the highest level of assurance regarding the validity of the reported activities. This aligns with IIA's emphasis on obtaining the best available evidence to support audit findings.
Why Not Other Options?
Option B (Verifying final report vs. initial budget): This only compares reports, which might not accurately reflect the actual activities conducted by the grantee.
Option C (Reconciling general ledger accounts): This focuses on financial records, which may not provide sufficient detail about the actual activities conducted.
Option D (Interviewing corporate affairs employees): While informative, this method only provides secondhand information and does not directly verify the grantee's activities.
Conclusion: Option A is correct because visiting the grantee provides the most reliable and direct evidence that the activities are in line with the grant's defined scope, ensuring the validity of the grantee's reported activities.
NEW QUESTION # 172
The chief audit executive (CAE) of a new organization is in the process of determining the manner in which audit reports will be distributed and to whom. According to the Standards, which of the following is the most appropriate course of action for the CAE to take to develop this distribution process?
- A. The CAE should meet with senior management for their input, but finalize the distribution of all reports with the board.
- B. The CAE should independently implement the report distribution, using best judgment to ensure that all relevant stakeholders are informed.
- C. The CAE should request that senior management and the board meet to determine the most appropriate reporting method.
- D. The process should be determined in meetings with the external auditor and senior management to ensure alignment with external reporting.
Answer: A
NEW QUESTION # 173
When planning an audit engagement, what should an internal auditor first consider when assessing the risk of fraud in the area to be audited?
- A. Management's risk appetite.
- B. Organizational structure.
- C. Existence of evidence of fraud.
- D. Impact of and exposure to fraud.
Answer: D
Explanation:
Section: Volume C
NEW QUESTION # 174
An internal auditor wants to determine whether employees are complying with the information security policy, which prohibits leaving sensitive information on employee desks overnight. The auditor checked a sample of
90 desks and found eight that contained sensitive information. How should this observation be reported, if the organization tolerates 4 percent noncompliance?
- A. The incidents of noncompliance exceed the tolerance level and should be included in the final engagement report.
- B. The matter does not need to be reported, because the noncompliant findings fall within the acceptable tolerance limit.
- C. The incidents of noncompliance fall outside the acceptable tolerance limit and require immediate corrective action, as opposed to reporting.
- D. The deviations are within the acceptable tolerance limit, so the matter only needs to be reported to the information security manager.
Answer: A
NEW QUESTION # 175
An internal auditor is conducting an initial risk assessment of an audit area and wants to assess management's compliance with privacy laws for safeguarding customer information stored on the organization's servers.
Which course of action is appropriate for this phase of the engagement?
- A. Consider the detection risk of noncompliance with the laws
- B. Solicit the services of a specialist information systems auditor
- C. Consult with legal counsel about new privacy laws to establish appropriate criteria
- D. Obtain the most current approved copies of the organization's privacy policy
Answer: D
Explanation:
In the initial risk assessment phase, it is critical for the internal auditor to understand the current policies and procedures in place. By obtaining the most current approved copies of the organization's privacy policy, the auditor can assess whether these policies are in compliance with privacy laws and are effectively implemented. This approach provides a solid foundation for understanding the existing controls and identifying areas where there may be gaps or weaknesses. Consulting with legal counsel or a specialist can be subsequent steps if further expertise is needed, but understanding the internal policies is the primary and essential first step.
:
Institute of Internal Auditors (IIA), International Standards for the Professional Practice of Internal Auditing (Standards), Standard 2210 - Engagement Objectives.
NEW QUESTION # 176
A manufacturing organization specializes in the production of evaporated milk and breakfast cereals.
The manufacturing processes create significant loss in the form of waste and byproducts. The provision for normal production loss is known to senior management, but little action is taken when abnormal production losses occur. The organization sells its production byproducts to fish farmers at a reduced price. The byproducts are a widely recognized and used product in the fish farming industry. The organization has a policy that also allows its employees to purchase the byproducts at a negligible price.
Based on the above, which of the following risks should the internal audit function consider when planning an engagement of the production process?
- A. The production team may work overtime and be overworked.
- B. Increased misappropriation of finished products.
- C. The production team may be incentivized to increase production losses.
- D. Risk that the finished product quality may be impaired.
Answer: C
Explanation:
Comprehensive and Detailed Explanation From Exact Extract:
The scenario highlights that byproducts (normally waste) have market value and can also be purchased by employees at negligible cost. This creates a perverse incentive for production staff to increase production losses intentionally, since greater loss produces more byproducts available for resale or employee benefit.
This risk directly affects internal controls and fraud risk assessment.
Options B, C, and D are not supported by the scenario. The most relevant engagement risk is Option A.
NEW QUESTION # 177
Which of the following methodologies consists of the internal auditor holding individual meetings with different people, asking them the same questions, and aggregating the results?
- A. Structured interviews.
- B. Elicitation.
- C. Surveys.
- D. Facilitated workshops.
Answer: A
Explanation:
Structured interviews involve the internal auditor holding individual meetings with different people, asking them the same set of questions, and then aggregating the results. This method ensures consistency in the information gathered across multiple respondents, allowing for an effective comparison and analysis of the data collected.
IIA Reference:
IIA Standard 2310: Identifying Information suggests that information gathered during an audit must be reliable and relevant. Structured interviews help achieve this by ensuring that each interviewee is asked the same questions, thus providing comparable data across the board.
The Practice Guide on Interviewing Techniques emphasizes the use of structured interviews for consistency and comprehensiveness in data collection.
NEW QUESTION # 178
Which of the following statements is true regarding the final assurance engagement report issued to management?
- A. The audit report must present the information in the following order (1) audit scope, (2) engagement objectives, and (3) engagement results
- B. Communications must be relevant logical, and free from errors before they are disseminated.
- C. Ratings are only used to assess the condition of an observation made by an internal auditor.
- D. Audit findings may be communicated to management prior to issuance of the final approved audit report.
Answer: B
NEW QUESTION # 179
Which of the following is an appropriate role for the internal audit activity with regard to the organization's risk management program?
- A. Identify and ensure that appropriate controls exist to mitigate risks.
- B. Attain an adequate understanding of the organization's key risk mitigation strategies.
- C. Identify and manage risks in line with the organization's risk appetite.
- D. Ensure that a proper and effective risk management process exists.
Answer: B
Explanation:
According to IIA guidance, an appropriate role for the internal audit activity with regard to the organization's risk management program is to attain an adequate understanding of the organization's key risk mitigation strategies. This enables internal auditors to evaluate the effectiveness of risk management processes and provide assurance on the adequacy of risk controls. Identifying and managing risks, ensuring risk management processes exist, and ensuring controls exist to mitigate risks are responsibilities of management, not internal audit.
:
IIA Standards: 2120 - Risk Management
IIA Practice Guide: Internal Audit's Role in Risk Management
NEW QUESTION # 180
According to IIA guidance, which of the following is based on the results of a preliminary assessment of risks relevant to the area under review?
- A. Audit findings
- B. Audit plan
- C. Audit resources
- D. Audit objectives
Answer: D
Explanation:
According to Standard 2210 - Engagement Objectives, objectives must be established for each engagement and should reflect a preliminary risk assessment. Findings (A) come after testing, resources (B) are allocated later, and the audit plan (D) applies at the annual activity level. Thus, the correct answer is audit objectives (C).
NEW QUESTION # 181
Which of the blowing is an example of a compliance assurance engagement?
- A. Proving in-house training to senior management regarding applicable laws and regulations
- B. Proving an assessment of the design adequacy of controls related to consumer privacy and confidentially.
- C. Providing testing on the operating effectiveness of controls ever the reliability of financial reporting
- D. Providing an assessment of customer satisfaction with customer service provided by the organization
Answer: B
Explanation:
A compliance assurance engagement focuses on evaluating whether an organization is adhering to applicable laws, regulations, policies, and procedures. Assessing the design adequacy of controls related to consumer privacy and confidentiality is a prime example of such an engagement, as it ensures that the organization's controls are designed to comply with relevant privacy laws and regulations, thereby protecting consumer data and maintaining compliance.
:
The Institute of Internal Auditors (IIA) - Standards for the Professional Practice of Internal Auditing, Standard
2410 - Criteria for Communicating
NEW QUESTION # 182
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