CIA EXAM PART TWO -FINAL TEST 2026\2027.
Johnny Hagert, Chief Audit Executive, is determining the sufficiency of the resource allocation for
the internal audit activity's risk-based audit plan that establishes its priorities. Mr. Hagert must
consider all of the following except
A) Consequences of not completing the engagement on time
B) Communications received from senior management and the board
C) Knowledge of the internal audit staff
D) The audit universe
D) The audit universe
- The audit plan is based on (1) the audit universe (all auditable risk areas), (2) input from senior
management and the board and (3) assessed risks. However, sufficiency relates to the quantity of
resources needed to accomplish the approved audit plan, not to the universe of all possible audits within
the organization
A CAE has reviewed credentials, checked references, and interviewed a candidate for a staff
position. The CAE concludes that the candidate has a thorough understanding of internal audit
techniques, accounting, and finance. However, the candidate has limited knowledge of economics
and information technology. Which action is appropriate?
A) offer the candidate a position despite lack of knowledge in certain areas
B) offer the candidate a position if other staff members possess sufficient knowledge in
economics and information technology
C) Encourage the candidate to obtain additional training in economics and IT and then reapply
D) Reject the candidate because of the lack of knowledge required by the standards
B) offer the candidate a position if other staff members possess sufficient knowledge in economics and
information technology
- The internal audit activity collectively must have or obtain the knowledge, skills, and other competencies
needed to perform its responsibilities. Each member of the Internal Audit activity need not be qualified in
all disciplines
The key factor in the success of an internal audit activity's human resources program is...
A) an informal program for developing and counseling staff
,CIA EXAM PART TWO -FINAL TEST 2026\2027.
B) a compensation plan based on years of experience
C) a well-developed set of selection criteria
D) a program for recognizing the special interests of individual staff members
C) a well-developed set of selection criteria
- Internal auditors should be qualified and competent. Because the selection of a superior staff is
dependent on the ability to evaluate applicants, selection criteria must be well-developed. Appropriate
questions and forms should be prepared in advance to evaluate, among other things, the applicant's
technical qualifications, educational background, personal appearance, ability to communicate, maturity,
persuasiveness, self-confidence, intelligence motivation, and potential to contribute to the organization.
Audit committees have been identified as a major factor in promoting the independence of both
internal and external auditors. Which of the following is the most important limitation on the
effectiveness of audit committees?
A) audit committee members do not normally have degrees in the accounting or auditing fields
B) audit committee members are compensated by the organization and thus favor an owner's
view
C) audit committee may be composed of independent directors. However, those directors may
have close personal and professional friendships with management
D) audit committees devote most of their efforts to external audit concerns and do not pay much
attention to the internal audit activity and the overall control environment
C) audit committee may be composed of independent directors. However, those directors may have close
personal and professional friendships with management
- The audit committee is a subcommittee made up of outside directors who are independent of
management. Its purpose is to help keep external and internal auditors independent of management and
to ensure that the directors are exercising due care. However, if independence is impaired by personal
and professional friendships, the effectiveness of the audit committee may be limited
Staff members of the internal audit activity should be assigned to engagements and training
projects that will enable them to develop their potential. Which of the following should be the most
important consideration in making assignments that will allow staff members to develop
properly?
A) the importance of giving all staff members extensive supervisory experience
B) the skills and experience levels of internal auditors
,CIA EXAM PART TWO -FINAL TEST 2026\2027.
C) special interests of individual staff members
D) specific training requirements imposed by the Standards
B) the skills and experience levels of internal auditors
- The program for selecting and developing the human resources of the internal audit activity should
provide for written job descriptions for each level of the staff, selection of qualified and competent
individuals, training and continuing educational opportunities, performance appraisals at least annually,
and counsel on performance and professional development. Obviously, work assignments inconsistent
with an internal auditor's abilities will defeat the purposes of human resources development
Senior management has requested a compliance audit of the organization's employee benefits
package. Which of the following is considered the primary engagement objective by both the chief
audit executive and senior management?
A) Individual programs are operating in accordance with contractual requirements and
government regulations
B) the level of organizational contributions is adequate to meet the program's demands
C) benefit payments, when appropriate, are accurate and timely
D) participation levels support continuation of individual programs
A) individual programs are operating in accordance with contractual requirements and government
regulations
- The IA activity evaluates risk exposures related to governance, operations, and information systems
regarding, among other things, compliance with laws, regulations, and contracts. Based on the risk
assessment, the internal audit activity evaluates the adequacy and effectiveness of controls
encompassing governance, operations, and information systems. This evaluation should include, among
other things, compliance with laws, regulations, and contracts. Operation in accordance with contracts
and regulations takes precedence over all other objectives because it relates to the most basic aspects
of the programs.
Which of the following is the most important provision for an internal auditor to recommend for
inclusion in a contract for the purchase of a business application system from a small start-up
company?
A) Source code escrow clause
B) Copyright clause
, CIA EXAM PART TWO -FINAL TEST 2026\2027.
C) Limitation-of-liabilitiies clause
D) Right-to-audit clause
A) Source code escrow clause
- A source code escrow clause requires the application source code to be held in escrow by a trusted
third party. The third part releases the source code to the purchaser, or licensee, on the occurrence of
an event, specified in the clause
The CEO wants to know whether the purchasing function is properly meeting its charge to
"purchase the right materials at the right time in the right quantities." Which of the following
types of engagements addresses this request?
A) A compliance engagement relating to the purchasing function
B) An operational engagement relating to the purchasing function
C) A financial engagement relating to the purchasing department
D) a full-scope engagement relating to the manufacturing operation
B) An operational engagement relating to the purchasing function
- An operational engagement (audit) assesses the efficiency and effectiveness of an organization's
operations
Direct staff as a percentage of total staff is an example of which of the following types of
efficiency measures?
A) Operating Ratio
B) Productivity Ratio
C) Resource utilization rate
D) Productivity index
A) Operating Ratio
- The operating ratio measures the operational efficiency of an organization. Staffing is a component of
operations, and direct staff as a percentage of total staff is an example of an operating ratio.
Which of the following are approaches to a control self-assessment (CSA) program?
1. Facilitation
2. Cost-Benefit
3. Survey
Johnny Hagert, Chief Audit Executive, is determining the sufficiency of the resource allocation for
the internal audit activity's risk-based audit plan that establishes its priorities. Mr. Hagert must
consider all of the following except
A) Consequences of not completing the engagement on time
B) Communications received from senior management and the board
C) Knowledge of the internal audit staff
D) The audit universe
D) The audit universe
- The audit plan is based on (1) the audit universe (all auditable risk areas), (2) input from senior
management and the board and (3) assessed risks. However, sufficiency relates to the quantity of
resources needed to accomplish the approved audit plan, not to the universe of all possible audits within
the organization
A CAE has reviewed credentials, checked references, and interviewed a candidate for a staff
position. The CAE concludes that the candidate has a thorough understanding of internal audit
techniques, accounting, and finance. However, the candidate has limited knowledge of economics
and information technology. Which action is appropriate?
A) offer the candidate a position despite lack of knowledge in certain areas
B) offer the candidate a position if other staff members possess sufficient knowledge in
economics and information technology
C) Encourage the candidate to obtain additional training in economics and IT and then reapply
D) Reject the candidate because of the lack of knowledge required by the standards
B) offer the candidate a position if other staff members possess sufficient knowledge in economics and
information technology
- The internal audit activity collectively must have or obtain the knowledge, skills, and other competencies
needed to perform its responsibilities. Each member of the Internal Audit activity need not be qualified in
all disciplines
The key factor in the success of an internal audit activity's human resources program is...
A) an informal program for developing and counseling staff
,CIA EXAM PART TWO -FINAL TEST 2026\2027.
B) a compensation plan based on years of experience
C) a well-developed set of selection criteria
D) a program for recognizing the special interests of individual staff members
C) a well-developed set of selection criteria
- Internal auditors should be qualified and competent. Because the selection of a superior staff is
dependent on the ability to evaluate applicants, selection criteria must be well-developed. Appropriate
questions and forms should be prepared in advance to evaluate, among other things, the applicant's
technical qualifications, educational background, personal appearance, ability to communicate, maturity,
persuasiveness, self-confidence, intelligence motivation, and potential to contribute to the organization.
Audit committees have been identified as a major factor in promoting the independence of both
internal and external auditors. Which of the following is the most important limitation on the
effectiveness of audit committees?
A) audit committee members do not normally have degrees in the accounting or auditing fields
B) audit committee members are compensated by the organization and thus favor an owner's
view
C) audit committee may be composed of independent directors. However, those directors may
have close personal and professional friendships with management
D) audit committees devote most of their efforts to external audit concerns and do not pay much
attention to the internal audit activity and the overall control environment
C) audit committee may be composed of independent directors. However, those directors may have close
personal and professional friendships with management
- The audit committee is a subcommittee made up of outside directors who are independent of
management. Its purpose is to help keep external and internal auditors independent of management and
to ensure that the directors are exercising due care. However, if independence is impaired by personal
and professional friendships, the effectiveness of the audit committee may be limited
Staff members of the internal audit activity should be assigned to engagements and training
projects that will enable them to develop their potential. Which of the following should be the most
important consideration in making assignments that will allow staff members to develop
properly?
A) the importance of giving all staff members extensive supervisory experience
B) the skills and experience levels of internal auditors
,CIA EXAM PART TWO -FINAL TEST 2026\2027.
C) special interests of individual staff members
D) specific training requirements imposed by the Standards
B) the skills and experience levels of internal auditors
- The program for selecting and developing the human resources of the internal audit activity should
provide for written job descriptions for each level of the staff, selection of qualified and competent
individuals, training and continuing educational opportunities, performance appraisals at least annually,
and counsel on performance and professional development. Obviously, work assignments inconsistent
with an internal auditor's abilities will defeat the purposes of human resources development
Senior management has requested a compliance audit of the organization's employee benefits
package. Which of the following is considered the primary engagement objective by both the chief
audit executive and senior management?
A) Individual programs are operating in accordance with contractual requirements and
government regulations
B) the level of organizational contributions is adequate to meet the program's demands
C) benefit payments, when appropriate, are accurate and timely
D) participation levels support continuation of individual programs
A) individual programs are operating in accordance with contractual requirements and government
regulations
- The IA activity evaluates risk exposures related to governance, operations, and information systems
regarding, among other things, compliance with laws, regulations, and contracts. Based on the risk
assessment, the internal audit activity evaluates the adequacy and effectiveness of controls
encompassing governance, operations, and information systems. This evaluation should include, among
other things, compliance with laws, regulations, and contracts. Operation in accordance with contracts
and regulations takes precedence over all other objectives because it relates to the most basic aspects
of the programs.
Which of the following is the most important provision for an internal auditor to recommend for
inclusion in a contract for the purchase of a business application system from a small start-up
company?
A) Source code escrow clause
B) Copyright clause
, CIA EXAM PART TWO -FINAL TEST 2026\2027.
C) Limitation-of-liabilitiies clause
D) Right-to-audit clause
A) Source code escrow clause
- A source code escrow clause requires the application source code to be held in escrow by a trusted
third party. The third part releases the source code to the purchaser, or licensee, on the occurrence of
an event, specified in the clause
The CEO wants to know whether the purchasing function is properly meeting its charge to
"purchase the right materials at the right time in the right quantities." Which of the following
types of engagements addresses this request?
A) A compliance engagement relating to the purchasing function
B) An operational engagement relating to the purchasing function
C) A financial engagement relating to the purchasing department
D) a full-scope engagement relating to the manufacturing operation
B) An operational engagement relating to the purchasing function
- An operational engagement (audit) assesses the efficiency and effectiveness of an organization's
operations
Direct staff as a percentage of total staff is an example of which of the following types of
efficiency measures?
A) Operating Ratio
B) Productivity Ratio
C) Resource utilization rate
D) Productivity index
A) Operating Ratio
- The operating ratio measures the operational efficiency of an organization. Staffing is a component of
operations, and direct staff as a percentage of total staff is an example of an operating ratio.
Which of the following are approaches to a control self-assessment (CSA) program?
1. Facilitation
2. Cost-Benefit
3. Survey
