IIA IIA-CIA-Part2 Exam Dumps

Internal Audit Engagement

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Exam Code	IIA-CIA-Part2
Exam Name	Internal Audit Engagement
Questions	747 Questions Answers With Explanation
Update Date	04, 30, 2026
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Demo Questions

Question # 1

According to the Standards, which of the following best describes the responsibility of thechief audit executive (CAE) for approving the final engagement report?• The CAE is responsible for obtaining management approval before issuing the finalreport.• The CAE has overall responsibility for the report but can delegate the review andapproval of the report.• The CAE is responsible for obtaining senior management's approval before releasing thefinal report.• The CAE is responsible for approving to whom and how the final report will bedisseminated. 

A. 1 and 3 only  
B. 1 and 4 only  
C. 2 and 3 only  
D. 2 and 4 only  

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Question # 2

The chief executive officer has requested that the chief audit executive (CAE) coordinate the establishment of an enterprise risk management (ERM) program for the organization. Which of the following would be the most appropriate action for the CAE?

A. Accept the request as the role of coordinating ERM is a core function of internal audit.
B. Decline the request as this role compromises the CAE's objectivity.
C. Accept the request after consulting with the board and adhering to proper safeguards.
D. Decline the request as internal audit has limited knowledge and experience of risk at the enterprise level to undertake the assignment.

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Question # 3

The chief audit executive (CAE) of a large retail operation believes that senior managementhas accepted a level of risk that exceeds the organization's current risk tolerance withrespect to a major expansion. The CAE plans to meet with senior management to discussthese concerns. According to IIA guidance, which of the following would be an appropriatecourse of action in preparation for this meeting?• Understand management's basis for the decision.• Advise the board of the concern and upcoming meeting.• Ascertain which members of management have accepted the risk.• Determine if management has the authority to accept the risk.

A. 1 and 2 only  
A. 1 and 2 only  
C. 2 and 3 only  
D. 3 and 4 only  

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Question # 4

Why should internal auditors develop a strong relationship with the external auditors?

A. External auditors offer an additional layer of approval to internal auditors' reports.
B. External auditors can help improve the effectiveness of internal control sampling techniques.
C. External auditors can offer an independent and knowledgeable viewpoint.
D. External auditors can share information gained from work with similar clients.

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Question # 5

During an engagement the internal auditors reported that the organization was paying suppliers without receiving the merchandise. Management responded that it would immediately establish the use of receiving reports. As part of the follow-up activity, which of the following procedures would be the most appropriate in determining that management action was implemented?

A. Ask management if the new policy related to the receiving reports is in place.  
B. Select a sample of receiving reports and determine if payments were made.  
C. Interview warehouse employees to ascertain adherence to new policy.  
D. Select a sample of payments and determine if a receiving report exists.  

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Question # 6

An internal auditor has just undertaken an organization-wide risk assessment. In identifying potential audit engagements the internal auditor should consider least:

A. Focusing on the high risk areas as sources of potential engagements.
B. Focusing in areas not audited last year.
C. Factoring in management requests.
D. Focusing on those risks highlighted by the external auditor.

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Question # 7

Which of the following statements is true? 

A. Consulting engagements provide the internal audit activity with flexibility to add value and do not need to be included in the long-range audit plan. 
B. The internal audit activity's plan of engagments must be based on a formal quantitative risk assessment.
C. The chief audit executive should consider changes to the long-range audit plan based on the requests of business unit managers. 
D. A risk assessment on which to base the internal audit activity's long-range plan must be undertaken at least once every three years. 

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Question # 8

According to the International Professional Practices Framework, which of the following statements is true regarding the use of the statement, "Conducted in Conformance with the International Standards for the Professional Practice of Internal Auditing," when communicating results of a seven-year-old internal audit activity?

A. The statement may be used only when conducting international engagements.
B. The statement may be used only if the results of the quality assurance and improvement program support the statement.
C. The statement may be used whether or not the internal audit department has an external quality assessment review or an independent validation of a self assessment.
D. The statement should not be used for a consulting engagement.

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Question # 9

Which of the following statements is true regarding the communication of audit engagement observations?

A. Criteria, condition, cause, and effect must be communicated for material observations only 
B. Criteria, condition, cause, and effect must be communicated for material observations and significant deficiencies only 
C. Criteria, condition, cause, and effect must be communicated for all engagement observations. 
D. Criteria, condition, cause, and effect do not need to be communicated for insignificant observations with adquate compensating key controls

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Question # 10

Which of the following statements is correct regarding the use of a program evaluation andreview technique (PERT) model?• It makes use of a probability model to arrive at a realistic estimate of time necessary forcompletion of the audit engagement.• It requires that activities are performed in sequence such that each task is completedbefore the commencement of the next activity.• It remains fixed once completed to act as a baseline for measuring the performance of theaudit staff following completion of the engagement.• It begins with the auditor-in-charge identifying the overall scope and then breaking downthe audit engagement into identifiable activity units. 

A. 1 and 3 only  
B. 1 and 4 only  
C. 2 and 3 only  
D. 2 and 4 only  

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Question # 11

To furnish useful and timely information and promote improvements in operations, internal auditors should provide:

A. Senior management with reports that emphasize the operational details of defective conditions.
B. Operating management with reports that emphasize general concerns and risks.
C. Information in written form before it is discussed with the engagement client.
D. Reports that meet the expectations of both operational and senior management.

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Question # 12

Which of the following are key characteristics of enterprise risk management?1. It considers risk in the formulation of strategy.2. It applies risk management in some units of an entity.3. It takes a portfolio view of risks throughout the enterprise.4. It restricts the organization's ability to seize opportunities inherent in future events.

A. 2 and 3 only  
B. 1 and 3 only  
C. 2 and 4 only  
D. 1 and 4 only  

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Question # 13

An internal auditor has completed an audit of an organization's activities and is ready to issue a report. However, the client disagrees with the internal auditor's conclusions. The auditor should:

A. Withhold the issuance of the audit report until agreement on the issues is obtained.
B. Issue the audit report and state both the auditor and client positions and the reasons for the disagreement.
C. Issue the audit report and omit the client's conclusion as it is not the opinion of the internal auditor.
D. Perform additional work, with the client's concurrence, to resolve the areas of disagreement and delay the issuance of the report until an agreement is reached.

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Question # 14

According to IIA guidance, which of the following strategies would be the least effective in helping a chief audit executive build a stronger relationship with the board?

A. Consider formality and tone of communications to ensure they are appropriate.  
B. Minimize instances of ad hoc communications with board members.  
C. Consider the possible repercussions created by commentary on deficiencies.  
D. Avoid making presumptuous comments without sufficient facts.  

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Question # 15

As part of a preliminary survey of the purchasing function, an internal auditor reads the department's policies and procedures manual and concludes that the manual describes the processing steps clearly and contains an appropriate internal control design. The next engagement objective is to evaluate the operating effectiveness of internal controls. Which procedure would fulfill this objective most effectively?

A. Perform a design test.
B. Perform a compliance test.
C. Perform a systems test.
D. Perform an efficiency test.

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Question # 16

According to the Standards, which of the following describes the condition attribute when applied to the observations and recommendations contained in the audit report?

A. The standards, measures, or expectations used in making an evaluation or verification.
B. The reason for the difference between the expected state and the actual state.
C. The factual evidence that the internal auditor found in the course of the examination.
D. The risk or exposure the organization encounters because the actual state is not consistent with the criteria.

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Question # 17

Management has asked the internal audit activity to perform an operational audit of a division that recently reported an increase in expenditures in addition to a decrease in profits. However, existing internal audit resources are currently engaged in a legal compliance audit. Which factor would be considered least important in deciding whether resources should be removed from the legal compliance audit to the operational audit?

A. The increase in expenditures at the division over the past year. 
B. The probability that the legal compliance audit will detect fraud. 
C. The results of the external auditor's most recent financial audit. 
D. The potential for regulatory fines associated with the legal compliance audit. 

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Question # 18

Inadequate risk assessment would have the strongest negative impact in which of the following phases of an audit engagement?

A. Determining the scope.
B. Reviewing internal controls.
C. Testing.
D. Evaluating findings.

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Question # 19

Which of the following examples of audit evidence is the most persuasive?

A. Real estate deeds, which were properly recorded with a government agency. 
B. Canceled checks written by the treasurer and returned from a bank. 
C. Time cards for employees, which are stored by a manager. 
D. Vendor invoices filed by the accounting department. 

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Question # 20

An internal auditor recommended that an organization implement computerized controls in its sales system in order to prevent sales representatives from executing contracts in excess of their delegated authority levels. A follow-up review found that the sales system had not been modified, but a process had been implemented to obtain written approval by the vice president of sales for all contracts in excess of $1 million. The chief audit executive (CAE) would be justified in reporting this situation to the organization's board iF.I. In the opinion of the CAE, the level of residual risk assumed by senior management is too high.II. Testing of compliance with the new process finds that all new contracts in excess of $1 million have been approved by the vice president of sales.III. The cost of modifying the sales system to include a preventive control is less than $100,000.

A. I only
B. III only
C. I and III only
D. I, II, and III

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Question # 21

A code of business conduct provides: 

A. A fraud avoidance plan that does not explicitly describe punishments for violations. 
B. A passive method of fraud deterrence. 
C. A program to anonymously report irregularities to authorities. 
D. An alternative to "tone at the top" programs. 

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Question # 22

In a payroll audit, a staff auditor suspects that signatures on some of the documents being sampled for examination are not authentic. What action should the auditor take before proceeding with the examination?

A. Suggest to the payroll manager that the suspicious documents should be sent to the organization's security department for forensic review. 
B. Keep the suspicious documents in the workpaper file until the end of the engagement, and then discuss the suspicions with the payroll manager. 
C. Discuss the suspicious documents with payroll staff to seek their views on the authenticity of the signatures. 
D. Review the suspicious documents with the chief audit executive and seek advice concerning further examination. 

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Question # 23

According to the International Professional Practices Framework, which of the following would not be considered when performing an initial risk assessment in engagement planning? 

A. The reliability of management’s assessment of risk.  
B. Management’s process for monitoring, reporting, and resolving risk issues.  
C. Management's methodology for defining risk criteria.  
D. Risks in related activities relevant to the activity under review.  

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Question # 24

Which of the following is an advantage of an interim report?I.An interim report provides timely feedback to the audit engagement client.II.An interim report provides a mechanism for communicating information on red flags promptly while they are being investigated.III.An interim report provides an opportunity for auditor follow-up of findings before the engagement is completed.IV.An interim report increases the probability that corrective action will be initiated more quickly.

A. I and IV only
B. II and III o
C. I, III, and IV only 
D. I, II, III, and IV. 

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Question # 25

Which role is not considered a change agent when an organization wants to implement structural changes?

A. Senior management.
B. Line management.
C. Independent consultant.
D. Shareholder.

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