IIA-CIA-Part2 Premium Exam Questions

A periodic report from the chief audit executive (CAE) to the board typically includes information about the internal audit activity's purpose, authority, responsibility, and performance relative to the audit plan. This report ensures that the board is kept informed about the internal audit activity’s alignment with organizational goals, its independence, and any significant issues or deviations from the plan.

IIA References:

IIA Standard 2060: Reporting to Senior Management and the Board requires the CAE to report periodically to the board on the internal audit activity’s purpose, authority, responsibility, and performance relative to its plan. This standard ensures that the board has a clear understanding of how the internal audit activity is fulfilling its role.

The Practice Guide on Effective Communication with the Board recommends that the CAE provide regular updates on the internal audit activity’s progress against its plan and any significant issues that require the board’s attention.

Generalized audit software (GAS) is designed to assist auditors in performing data analysis and testing the logical controls embedded within information systems. This type of software can help an IT auditor review access controls by analyzing user permissions, access logs, and other relevant data to ensure that access is granted according to the principle of least privilege and organizational policies. GAS tools are versatile and can handle large volumes of data, making them suitable for testing logical controls in an accounting application.References:

The Institute of Internal Auditors (IIA) - Global Technology Audit Guide (GTAG) 1: Information Technology Controls

Flowcharts provide a visual depiction of the processes in the area under review, helping internal auditors and stakeholders understand the workflow and identify key control points. Additionally, flowcharts highlight control points, which assist auditors in evaluating the design of controls. These visual tools make it easier to identify potential gaps or weaknesses in the control design and understand how different processes and controls interact. They do not reduce the need for testing whether employees are observing internal control processes or directly prioritize internal control design weaknesses.References: The IIA's International Standards for the Professional Practice of Internal Auditing, Standard 2201 - Planning Considerations.

A. Determine whether the purchasing department complies with policy by examining a random selection of purchase orders:Correct. Reviewing a random sample of purchase orders is a standard procedure for evaluating compliance with purchasing policies, such as approval requirements, vendor selection, and adherence to budget constraints.

B. Evaluate whether purchasing requests are properly approved by authorized staff by obtaining independent verification from the vendors:Vendor verification is not typically used to evaluate internal approvals as this information is available within the organization’s records.

C. Ascertain whether material receipts are recorded on a timely basis by reviewing physical inventory stock counts:Physical inventory reviews focus on inventory management and reconciliation, not specifically on the timeliness of receipts.

D. Determine whether prices charged for goods received are correct by reviewing the appropriate accounts payable record by vendor:While reviewing accounts payable records helps verify the accuracy of pricing, it does not directly evaluate the purchasing department’s adherence to procedures.

CIA Exam Syllabus Reference:

Domain V: Performing Internal Audit Services – Audit Engagement Objectives and Procedures.