[Free] Download New Updated (October 2016) IIA IIA-CIA-Part2 Real Exam 21-30

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QUESTION 21

Which of the following does not represent a difficulty in using red flags as fraud indicators?

 

A.

Many common red flags are also associated with situations where no fraud exists.

B.

Some red flags are difficult to quantify or to evaluate.

C.

Red flag information is only gathered in extraordinary circumstances.

D.

The red flags literature is not well enough established to have a positive impact on auditing.

 

Correct Answer: D

 

 

QUESTION 22

Which of the following describes an internal auditor’s responsibilities to include audit procedures to detect fraud in audits of a multinational organization?

 

A.

International Accounting Standards require the internal auditor to include audit procedures which would detect fraud if it would cause a material misrepresentation of the financial statements.

B.

Internal auditors do not have any specific responsibilities with respect to including fraud- related audit procedures.

C.

Proper audit procedures, when carried out with due professional care, will guarantee that fraud, if present, will be detected.

D.

If significant control weaknesses are detected, additional tests should be directed toward other indicators of fraud.

 

Correct Answer: D

 

 

QUESTION 23

During an operational audit of a chain of pizza delivery stores, an auditor determined that cold pizzas we
re causing customer dissatisfaction. A review of oven calibration records for the last six months revealed that adjustments were made on over 40 percent of the ovens.

Based on this, the auditor:

 

A.

Has enough evidence to conclude that improperly functioning ovens are the cause.

B.

Needs to conduct further inquiries and reviews to determine the impact of the oven variations on the pizza temperature.

C.

Has enough evidence to recommend the replacement of some of the ovens.

D.

Must search for another cause since approximately 60 percent of the ovens did not require adjustment.

 

Correct Answer: B

 

 

QUESTION 24

Which of the following would provide the best audit
evidence regarding the effectiveness of an applied research department?

 

A.

Develop a cost-per-product analysis for products developed over the past five years.

B.

Develop a report on revenue generated by or cost savings directly attributable to newly developed products.

C.

Compare research as a percentage of revenue between this company and all major competitors in the same industry.

D.

Compare the number of this year’s new product developments to the number of new product developments for the past five years.

 

Correct Answer: B

 

 

QUESTION 25

An auditor decides to perform an inventory turnover analysis for both raw materials inventory and finished goods inventory. The analysis would be potentially useful in:

 

I. Identifying products for which management has not been attuned to changes in market demand.

 

II. Identifying potential problems in purchasing activities.

 

III. Identifying obsolete inventory.

 

A.

III only

B.

I and II only

C.

II and III only

D.

I, II, and III

 

Correct Answer: D

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QUESTION 26

Which of the following would provide the greatest assurance of the accuracy of a computer program’s computation of freight charges for catalog sales?

 

A.

Use discovery sampling, selecting transactions from invoices which should have freight charges added to them.

B.

Use either test data or parallel simul-ation to test the computer application.

C.

Use difference estimation, selecting transactions from invoices which should have freight charges added to them.

D.

Use generalized audit software to select a monetary-unit sample of invoices that have been billed to customers.

 

Correct Answer: B

 

QUESTION 27

If an auditor used nonstatistical sampling instead of statistical sampling to estimate the value of inventory, which of the following would be true?

 

A.

The confidence level could not be quantified.

B.

The precision would be larger.

C.

The projected value of inventory would be less reliable.

D.

The risk of incorrect acceptance would be higher.

 

Correct Answer: A

 

 

QUESTION 28

An auditor prepared a workpaper that consisted of a list of employee names and identification numbers as well as the following statement:

 

“A statistical sample of 40 employee personnel files was selected to verify that they contain all documents required by company policy 501 (copy attached). No exceptions were noted.”

 

The auditor did not place any audit verification symbols on this workpaper. Which of the following changes would most improve the auditor’s workpaper?

 

A.

Use of audit verification symbols to show that each file was examined.

B.

Removal of the employee names to protect their confidentiality.

C.

Justification for the sample size.

D.

Listing of the actual documents examined for each employee.

 

Correct Answer: C

 

 

QUESTION 29

Which of the following files, when compared with billing records, would provide the best source of information for determining if all goods shipped are billed to customers?

 

A.

Pre-numbered customer invoices.

B.

Accounts receivable transactions.

C.

Pre-numbered shipping documents.

D.

Customer purchase orders.

 

Correct Answer: C

 

 

QUESTION 30

During an audit of executive travel, an auditor noted that the president’s travel expense reimbursements were approved by an executive secretary who reported to the president. The organization’s reimbursement policy requires all travel expense reimbursements to be approved by the traveler’s supervisor, but it does not address the president’s reimbursements. Which of the following represents the auditor’s best recommendation in this situation?

 

A.

The organization’s reimbursement policy should be amended to grant the president’s executive secretary the authority to approve the president’s travel expense reimbursements.

B.

The approval policy for executive travel should be considered at the next meeting of the audit committee of the board of directors.

C.

The president’s travel expense reimbursements should be reviewed and approved by the chief financial officer.

D.

The president’s noncompliance should be considered immaterial.

 

Correct Answer: B

 

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