IIA Updated IIA-CIA-Part2 Exam Questions and Answers by kara

Internal control questionnaires (ICQs) are used to gather information about the presence and effectiveness of controls within an organization. One of the limitations of ICQs is that the answers provided by respondents can be easily misinterpreted. This misinterpretation can occur due to unclear questions, differences in understanding terminology, or respondents not fully comprehending the context of the questions. Therefore, while ICQs are useful tools for identifying control issues, they require careful interpretation and often necessitate follow-up for clarification to ensure accurate understanding and assessment of the controls.

References:

The Institute of Internal Auditors (IIA) Practice Guide: "Internal Control Questionnaires"

IIA Standard 2310: Identifying Information

A privacy audit engagement should comprehensively cover all aspects related to the collection, storage, and compliance of personal information. This includes assessing the appropriateness of the information gathered (1), reviewing the methods used to collect the information (2), ensuring the information collected complies with applicable laws (3), and determining how the information is stored (4). This comprehensive approach ensures that the organization adheres to privacy standards and regulations effectively. References: = IIA’s Practice Guide: “Privacy Impact Assessment” and IIA Standard 2110.A2 -

Discovery sampling is a statistical sampling method that is specifically designed for detecting fraud or other irregularities. It is most appropriate when the auditor expects that deviations or fraud may be rare but significant if found.

Discovery Sampling:

Discovery sampling is used when the auditor is trying to identify at least one occurrence of a particular event, such as fraud. The sample is designed so that if a single error is found, it suggests that more may exist within the population, warranting further investigation.

Application in Fraud Detection:

Discovery sampling is effective in fraud detection because it focuses on identifying whether any instances of fraud exist within a population. This approach is well-suited for situations where even a small number of fraudulent transactions could have a significant impact.

IIA Practice Guide on Statistical Sampling:

The IIA suggests that discovery sampling is appropriate when the goal is to find the presence of an error or fraud, particularly in populations where such occurrences are expected to be infrequent.

Option B (Stop-or-go sampling): This method is used to control the risk of over-auditing when errors are expected to be low, but it is not specifically designed for fraud detection.

Option C (Haphazard sampling): This is a non-statistical sampling method and is not appropriate for systematic fraud detection.

Option D (Stratified attribute sampling): This method divides the population into subgroups but is not specifically aimed at discovering fraud.

Detailed Explanation:Why Not Other Options?Conclusion: Option A is correct because discovery sampling is the most appropriate statistical method for testing a population for fraud, as it is designed to detect even a small number of significant deviations, consistent with IIA guidance.

Intervening during an audit involving ethical wrongdoing (Option 1) and negotiating a settlement of an employee claim for personal damages (Option 4) represent significant ethical risks if exhibited by an organization’s board. These actions could indicate attempts to influence or undermine the audit process and the fair handling of ethical issues, leading to potential conflicts of interest and compromising the integrity of the organization’s governance processes. Discussing periodic reports of ethical breaches (Option 2) and authorizing an investigation of an unsafe product (Option 3) are appropriate and responsible board actions that do not pose ethical risks.References:

IIA Standard 1110: Organizational Independence.

IIA Code of Ethics.