[Free] Download New Updated (October 2016) IIA IIA-CIA-Part2 Real Exam 161-170

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QUESTION 161

Which of the following is a red flag associated with fictitious revenues?

 

A.

Slow growth or unusually low profitability.

B.

Unusual decrease in the number of days’ sales in receivables.

C.

Substantial increase in receivables turnover.

D.

Significant transactions with related parties.

 

Correct Answer: D

 

 

QUESTION 162

A manag
er of one of a retailer’s several retail outlets is stealing cash from cash sales, recording the sales as accounts receivable, and subsequently writing off the fictitious accounts receivable as bad debts. Which of the following comparisons would be most effective in signaling the possibility of such a fraud?

 

A.

Bad debt expense as a percentage of sales, compared to that of the other outlets.

B.

Bad debt expense as a percentage of sales, compared to that of previous years.

C.

Percentage of past-due accounts receivable, compared to that of the other outlets.

D.

Percentage of past-due accounts receivable, compared to that of previous years.

 

Correct Answer: A

 

 

QUESTION 163

The scope of a business process review primarily involves:

 

A.

Appraising the environment and comparing against established criteria.

B.

Assessing the organization’s system of internal controls.

C.

Reviewing routine financial information and assessing the appropriateness of various accounting treatments.

D.

Evaluating organizational and departmental structures, including assessments of transaction flows.

 

Correct Answer: D

 

 

QUESTION 164

The use of standard operating procedure questionnaires in audit fieldwork can be beneficial because.

 

A.

These questionnaires can both identify discrepancies and educate clients.

B.

Standard operating procedures are essential to the effectiveness and efficiency of operations.

C.

These questionnaires are more comprehensive than are other types of techniques for gathering data during fieldwork.

D.

These questionnaires do not normally require prior clearance with management of the audited area.

 

Correct Answer: A

 

 

QUESTION 165

Which of the following methods would an auditor most likely use to document a complex sales order process?

 

A.

Develop a horizontal flowchart, with supporting documentation for key control points.

B.

Create a critical path method chart, noting the processes involved for each step.

C.

Perform a process review, assigning time and cost to each step of the process to develop a hierarchy flowchart.

D.

Utilize a systems narrative, which can be updated during subsequent audits.

 

Correct Answer: A

 

 

QUESTION 166

Which of the following actions by management would reduce an employee’s opportunity to commit fraud?

 

A.

Establishing physical controls over company assets.

B.

Eliminating bonuses tied to sales or other performance goals.

C.

Defining ethical behavior expectations in the company handbook.

D.

Identifying consequences, such as termination, for fraudulent activities.

 

Correct Answer: A

 

 

QUESTION 167

The internal audit activity can be involved with systems development continuously, immediately prior to implementation, after implementation, or not at all. An advantage of continuous internal audit involvement compared to the other types of involvement is that:

 

A.

The cost of audit involvement can be minimized.

B.

There are clearly defined points at which to issue audit comments.

C.

Redesign costs can be minimized.

D.

The threat of lack of audit independence can be minimized.

 

Correct Answer: C

 

 

QUESTION 168

Which of the following techniques could be used to evaluate the effectiveness of changes to the operation of a computer help line?

 

A.

Benchmarking.

B.

Baseline measurements.

C.

Walk-throughs.

D.

Quality circles.

 

Correct Answer: B

 

 

QUESTION 169

Which of the following factors is least essential to a successful control self-assessment workshop?

 

A.

Voting technology.

B.

Facilitation training.


C.

Prior planning.

D.

Group dynamics.

 

Correct Answer: A

 

 

QUESTION 170

A chief audit executive (CAE) suspects that several employees have used desktop computers for personal gain. In conducting an investigation, the primary reason that the CAE would choose to engage a forensic information systems auditor rather than using the organization’s information systems auditor is that a forensic information systems auditor would possess:

 

A.

Knowledge of the computing system that would enable a more comprehensive assessment of the computer use and abuse.

B.

Knowledge of what constitutes evidence acceptable in a court of law.

C.

Superior analytical skills that would facilitate the identification of computer abuse.

D.

Superior documentation and organization skills that would facilitate in the presentation of findings to senior management and the board.

 

Correct Answer: B

 

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