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

In internal auditing, the use of Computer-Assisted Audit Techniques (CAATs) allows auditors to analyze large datasets efficiently and effectively. When it comes to fraud detection, analyzing the full population of data is often the best approach.

IIA Practice Guide on CAATs:

CAATs enable auditors to analyze entire datasets rather than relying on samples. This approach is particularly useful in fraud detection, where anomalies or fraudulent transactions may be rare and could be missed if only a sample is analyzed.

Full Population Analysis:

By analyzing the entire dataset, the auditor can identify patterns, anomalies, and outliers that could indicate fraudulent activity. This comprehensive approach increases the likelihood of detecting fraud.

IIA Standard 1220 – Due Professional Care:

This standard requires auditors to exercise due care, which includes considering the use of CAATs for fraud detection to ensure that all relevant data is reviewed, not just a subset.

Option A (Data should remain segregated): Keeping data segregated may complicate the analysis and hinder the discovery of cross-division anomalies.

Option C (Reactive approach): While tips and whistleblowing are important, a proactive approach using CAATs to analyze full populations is more effective in detecting fraud.

Option D (Random sampling): Sampling may not be sufficient to detect fraud, as it could miss infrequent but significant fraudulent transactions.

Detailed Explanation:Why Not Other Options?

A. To better understand and influence executives' planning:Influencing planning is not a primary purpose of networking.

B. To make executives aware of the benefits that the internal audit activity can provide:Correct. Networking ensures executives understand how internal audit can add value.

C. To assist executives in setting the organization’s risk appetite:Risk appetite is primarily a management responsibility.

D. To have a better understanding of the training needed for the audit team:Training needs can be assessed through other means.

CIA Exam Syllabus Reference:

Domain IV: Managing the Internal Audit Function – Stakeholder Engagement.

According to IIA guidance, a newly promoted chief audit executive (CAE) should prioritize the review of audit reports based on the significance of the findings indicated by the opinion statements. A graded positive opinion (1) suggests that the audit found strong controls with no significant issues, while a third-party opinion (4) typically involves external assessments that may not require immediate internal action. Therefore, these opinions would receive the lowest review priority. In contrast, negative assurance opinions (2) and limited assurance opinions (3) indicate potential issues or limitations in the effectiveness of controls, necessitating higher priority review to address any significant concerns promptly. References: IIA Standard 2410 – Criteria for Communicating, IIA Practice Advisory 2410-1

To ensure that recommendations for enhancing internal controls have been effectively implemented, the internal auditor should conduct appropriate testing to verify management responses. This involves re-performing procedures, reviewing documentation, and possibly observing operations to confirm that the corrective actions have been adequately executed and are effective. Simply seeking a management assurance declaration (Option B) or observing corrective measures (Option A) may not provide sufficient evidence of proper implementation. Following up during the next scheduled audit (Option C) may delay the verification process, potentially allowing risks to persist.References:

IIA Standard 2500: Monitoring Progress.

IIA Practice Guide on Follow-up Processes in Internal Auditing.