IIA Updated IIA-CIA-Part3 Exam Questions and Answers by indi

Planning (ERP) software implementation, to evaluate whether the organization is prepared for the change. This type of audit helps identify potential risks, resource availability, process gaps, and stakeholder alignment, which are critical for successful implementation.

A. Readiness assessment (Correct Answer) – This assessment evaluates if the organization has the necessary resources, technology, and processes in place for a successful ERP implementation.

B. Project risk assessment – While a project risk assessment identifies potential threats to project success, it does not provide an overall assurance on readiness before implementation.

C. Post-implementation review – This is conducted after the project is completed and does not help assess the likelihood of success before implementation.

D. Key phase review – This approach evaluates progress during implementation but does not provide enterprise-wide assurance before starting the project.

IIA GTAG 12 – Auditing IT Projects recommends a readiness assessment before launching major IT initiatives.

IIA IPPF Standard 2120 – Risk Management emphasizes identifying pre-implementation risks to improve project success.

COBIT 2019 – APO03 (Managed Enterprise Architecture) supports readiness evaluations before system rollouts.

Explanation of Each Option:IIA References:

Understanding Financial Statements:

Income Statement (Option A) shows a company's revenues and expenses over a period but does not detail cash movements.

Owner's Equity Statement (Option B) tracks changes in the ownership interest but does not explain cash usage comprehensively.

Balance Sheet (Option C) provides a snapshot of financial position (assets, liabilities, and equity) at a given time, but not the flow of cash.

Statement of Cash Flows (Option D) details where cash comes from and how it is spent during a specific period, making it the best disclosure of money movement.

Why the Statement of Cash Flows is the Best Answer:

It categorizes cash flows into operating, investing, and financing activities to explain how cash is generated and utilized.

It is critical for assessing liquidity, solvency, and overall financial health.

Investors, auditors, and management use this statement to evaluate a company's ability to generate cash and meet obligations.

IIA Standard 2120 – Risk Management: Internal auditors assess financial risks, including cash management.

IIA GTAG (Global Technology Audit Guide) on Business Continuity and Liquidity: Emphasizes the importance of cash flow analysis for financial stability.

COSO’s Internal Control Framework: Highlights the role of financial reporting, including cash flows, in risk management.

Relevant IIA References:✅ Final Answer: Statement of Cash Flows (Option D).

Database administrators (DBAs) have privileged access, meaning they can make unauthorized or hidden changes to data, database structures, and security settings without detection. This presents a high risk of fraud, data manipulation, and security breaches.

A. The risk that database administrators will disagree with temporarily preventing user access to the database for auditing purposes. (Incorrect)

While resistance from DBAs during an audit can be a challenge, it is not a significant risk compared to the ability to manipulate data unnoticed.

B. The risk that database administrators do not receive new patches from vendors that support database software in a timely fashion. (Incorrect)

Patch management is a security concern but does not directly relate to the unique risk of DBAs abusing privileged access.

C. The risk that database administrators set up personalized accounts for themselves, making the audit time-consuming. (Incorrect)

While personal accounts can complicate audits, the greater risk is that DBAs can make changes without detection.

IIA GTAG 4 – Management of IT Auditing emphasizes the need for controls over privileged access to prevent unauthorized database modifications.

IIA Standard 2110 – Governance requires internal auditors to assess risks related to IT governance and privileged access management.

IIA GTAG 8 – Auditing Application Controls highlights that auditors must review DBA activity logs and ensure segregation of duties.

Explanation of Answer Choices:IIA References:Thus, the correct answer is D. The risk that database administrators could make hidden changes using privileged access.

Total Quality Management (TQM) focuses on continuous improvement, teamwork, and process efficiency. The CAE’s goal is to reduce audit time and improve client satisfaction, which requires collaborative decision-making and diverse skill sets to ensure a high-quality, efficient audit process.

(A) Assign a team with a trained audit manager to plan each audit and distribute fieldwork tasks to various staff auditors. ❌

Incorrect. While structured planning is beneficial, TQM emphasizes decentralized decision-making rather than relying solely on the audit manager.

(B) Assign a team of personnel who have different specialties to each audit and empower team members to participate fully in key decisions. ✅

Correct. TQM encourages cross-functional teams, collaboration, and shared decision-making, which helps in reducing audit time and improving quality.

IIA GTAG "Auditing Continuous Improvement Initiatives" highlights diverse audit teams as a best practice for improving audit effectiveness.

(C) Assign a team to each audit, designate a single person to be responsible for each phase of the audit, and limit decision-making outside of their area of responsibility. ❌

Incorrect. This approach is too rigid and limits team collaboration, which contradicts TQM principles.

(D) Assign a team of personnel who have similar specialties to specific engagements that would benefit from those specialties and limit key decisions to the senior person. ❌

Incorrect. Specializing teams in certain audits may improve technical accuracy, but TQM promotes diverse perspectives rather than restricting decisions to one senior auditor.

IIA GTAG – "Auditing Continuous Improvement Initiatives"

IIA Standard 2110 – Governance (Process Improvement)

ISO 9001 – Total Quality Management Principles

Analysis of Answer Choices:IIA References:Thus, the correct answer is B, as TQM supports cross-functional teams and shared decision-making to improve audit efficiency and client satisfaction.