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

A. Decline the audit engagement, because the Standards prohibit internal auditors from performing engagements where they lack the necessary competencies:The Standards allow for outsourcing or co-sourcing to meet competency gaps. Declining outright is not necessary.

B. Accept the audit engagement and use the engagement as an opportunity to develop the audit team’s IT expertise while performing the audit work:This approach risks compromising audit quality as the team lacks expertise.

C. Temporarily hire an experienced and knowledgeable IT analyst from the organization's IT department to lead the audit:This could create independence issues, as the IT analyst is part of the auditee’s function.

D. Outsource the audit engagement to a reputable IT audit consulting firm:Correct. Outsourcing ensures that the engagement is performed by qualified professionals, maintaining quality and adherence to the Standards.

CIA Exam Syllabus Reference:

Domain IV: Managing the Internal Audit Function – Resourcing and Competency Management.

When an internal auditor receives a document displaying all the steps of a process and the path taken as transactions flow between each step, the auditor is most likely to use this document to perform an assessment of the adequacy of process controls. This flowchart or process map helps the auditor understand the process, identify key control points, and evaluate whether the existing controls are sufficient to mitigate risks within the process.

IIA Standards: 2201 - Planning the Engagement

IIA Practice Guide: Internal Auditing and Fraud

According to IIA guidance, the focus of a review of controls to prevent fraud should be on the effectiveness rather than the efficiency of the controls. Effectiveness pertains to whether the controls adequately mitigate fraud risks and prevent fraudulent activities, while efficiency focuses on the performance and cost-effectiveness of the controls, which is not the primary concern in preventing fraud. This makes statement A false in the context of IIA guidance.

IIA Standards: 1220.A1 - Due Professional Care

IIA Practice Guide: Fraud Prevention and Detection in an Automated World

Both job order cost systems and process cost systems track three manufacturing cost elements: direct materials, direct labor, and manufacturing overhead. These cost elements are essential in calculating the total production cost and determining the cost per unit.

Direct Materials: The raw materials directly used in the production of goods.

Direct Labor: The wages of workers who are directly involved in manufacturing the products.

Manufacturing Overhead: Indirect costs associated with production, such as utilities, maintenance, and depreciation of equipment.