CIA EXAM PART 2.FINAL TEST 2026\2027.
what's not an appropriate staffing issue
providing competitive selection of employee benefits (compensation isn't part of staffing)
staffing issues:
-selecting qualified and competent individuals
-providing continuing educational opportunities for each internal auditor
-appraising each internal auditor's performance at least annually
to improve their efficiency, internal auditors may rely upon work of external auditors
if it is
coordinated with internal auditing work
(performance standard 2050 - organizations may use work of external auditors to provide
assurance related to activities within scope of internal auditing
CAE coordinates internal and external audit work)
independent external audits performed for parent by firm A
for foreign subsidiary by firm B
internal audit provides direct assistance to both firms (CAE has audit programs and
selected working papers produced by each firm)
firm B wants to rely on audit of function at parent org
to place reliance on work performed, the foreign subsidiary's auditors have
requested copies of workpapers. what's the most appropriate response to foreign
subsidiary's auditors from CAE at parent org?
provide copies of workpapers (access if provided to external auditors for them to be
satisfied as to acceptability of relying on internal auditors' work)
Assessments of the work of external auditors may be made by the chief audit
executive
as part of evaluation of coordination between internal and external auditors
(CAE is responsible for regular evaluations of coordination between int/ext auditors -
assessment of overall efficiency and effectiveness of int/ext audit activities)
,CIA EXAM PART 2.FINAL TEST 2026\2027.
primary difference between operational engagements and financial engagements is
that in the former internal auditors
are seeking to help management use resources in the most effective manner possible
primary objective of
-financial engagement: express opinion on fairness of F/S
-operational engagement: evaluate accomplishments of established objectives and goals for
operations and efficient use of resources
which of the following procedures is the most valuable in engagement involving traffic
department operations of large manufacturer?
review procedures for selection of routes and carriers (premise and policies for day to day
activities)
why should organization use survey form of control self-assessment
organizational culture doesn't encourage openness
surveys are used if:
-desired respondents are too numerous or widely dispersed to participate in a workshop
-culture of organization hinders open, candid discussions
-management wants to minimize time spent and costs incurred in gathering info
elements of CSA performed using facilitated team workshop approaches includes:
treating participating employees as process owners
CSA: gathering of group of people into a same time same place meeting (facilitation seating
with facilitator)
aim of which format of facilitated approach is to decide whether procedures are
working effectively
objective-based: focuses on best way to accomplish business objective (identify procedures
presently in place to support objective and determines residual risks remaining)
Controls should be designed to ensure that
,CIA EXAM PART 2.FINAL TEST 2026\2027.
Operations are performed efficiently.
auditor inspects client's investment records to determine any transfers between
categories of investments have been properly recorded. primary purpose of this
procedure is to obtain evidence concerning relevant F/S assertions about
-classification and understandability (categories of investment)
-valuation and allocation (need to know how to value it to classify)
auditor traces the daily remittance lists to last validated deposit ticket for the period.
assertions being tested:
completeness (tracing)
corporation acquired building and arranged mortgage financing during the year.
verification of mortgage acquisition costs would be least likely to include examination
of related:
deed (rights and obligations)
in establishing existence and ownership of investment held by corporation in form of
stock, auditor should inspect the securities
confirm number of shares owned that are held by independent custodian
to test existence assertion: (vouching to support document)
-inspection
-external confirmation by issuer, custodian or counterparty
-reading partnership/agreement
a cutoff test of sales complements verification of
A/R
sales cutoff - obtains assurance that receivables are recorded in appropriate period
(examine sales and receivables recorded days before and after cutoff date and compare
them with sales invoices and shipping documents to assure they've been recorded in proper
period)
auditor who wishes to test for occurrence of equity transactions should complete:
vouch entries to supporting documents
, CIA EXAM PART 2.FINAL TEST 2026\2027.
during audit of a company's equity accounts, auditor determines whether restrictions
have been imposed on R/E resulting from loans, agreements or state law. audit
procedure most likely is intended to verify relevant assertion about:
classifications and understandability
An engagement objective is to determine if a company's accounts payable contain all
outstanding liabilities. Which of the following audit procedures would not be relevant
for this objective?
vouching A/P listing to supporting documents (tests existence instead of completeness)
fraud detection:
purchasing agent acquired items for personal use with organization's funds and
picked up items at vendor's warehouse
supervisors routinely signed authorization sheet without reviewing supporting docs.
procedures for fraud detection:
performing trend analysis of expenses
A population of entries in the fixed assets file from the current period and the next
period is an appropriate population to sample if the audit objective is to determine
whether
expenditures for fixed assets have been recorded in proper period
An audit found that the cost of some material installed on capital projects had been
transferred to the inventory account because the capital budget had been exceeded.
Which of the following would be an appropriate technique for the internal audit
activity to use to monitor this situation?
review JE that transfer costs from capital to inventory accounts
An organization has outsourced many services, including waste collection, cafeteria,
and custodial services previously performed internally. Management requests an
evaluation of contract compliance and the overall performance of the organizations
performing the outsourced activities. Which of the following engagement procedures
is the least effective in accomplishing the engagement objectives?
comparison of identified activities for each outsourcer with best practices of others
what's not an appropriate staffing issue
providing competitive selection of employee benefits (compensation isn't part of staffing)
staffing issues:
-selecting qualified and competent individuals
-providing continuing educational opportunities for each internal auditor
-appraising each internal auditor's performance at least annually
to improve their efficiency, internal auditors may rely upon work of external auditors
if it is
coordinated with internal auditing work
(performance standard 2050 - organizations may use work of external auditors to provide
assurance related to activities within scope of internal auditing
CAE coordinates internal and external audit work)
independent external audits performed for parent by firm A
for foreign subsidiary by firm B
internal audit provides direct assistance to both firms (CAE has audit programs and
selected working papers produced by each firm)
firm B wants to rely on audit of function at parent org
to place reliance on work performed, the foreign subsidiary's auditors have
requested copies of workpapers. what's the most appropriate response to foreign
subsidiary's auditors from CAE at parent org?
provide copies of workpapers (access if provided to external auditors for them to be
satisfied as to acceptability of relying on internal auditors' work)
Assessments of the work of external auditors may be made by the chief audit
executive
as part of evaluation of coordination between internal and external auditors
(CAE is responsible for regular evaluations of coordination between int/ext auditors -
assessment of overall efficiency and effectiveness of int/ext audit activities)
,CIA EXAM PART 2.FINAL TEST 2026\2027.
primary difference between operational engagements and financial engagements is
that in the former internal auditors
are seeking to help management use resources in the most effective manner possible
primary objective of
-financial engagement: express opinion on fairness of F/S
-operational engagement: evaluate accomplishments of established objectives and goals for
operations and efficient use of resources
which of the following procedures is the most valuable in engagement involving traffic
department operations of large manufacturer?
review procedures for selection of routes and carriers (premise and policies for day to day
activities)
why should organization use survey form of control self-assessment
organizational culture doesn't encourage openness
surveys are used if:
-desired respondents are too numerous or widely dispersed to participate in a workshop
-culture of organization hinders open, candid discussions
-management wants to minimize time spent and costs incurred in gathering info
elements of CSA performed using facilitated team workshop approaches includes:
treating participating employees as process owners
CSA: gathering of group of people into a same time same place meeting (facilitation seating
with facilitator)
aim of which format of facilitated approach is to decide whether procedures are
working effectively
objective-based: focuses on best way to accomplish business objective (identify procedures
presently in place to support objective and determines residual risks remaining)
Controls should be designed to ensure that
,CIA EXAM PART 2.FINAL TEST 2026\2027.
Operations are performed efficiently.
auditor inspects client's investment records to determine any transfers between
categories of investments have been properly recorded. primary purpose of this
procedure is to obtain evidence concerning relevant F/S assertions about
-classification and understandability (categories of investment)
-valuation and allocation (need to know how to value it to classify)
auditor traces the daily remittance lists to last validated deposit ticket for the period.
assertions being tested:
completeness (tracing)
corporation acquired building and arranged mortgage financing during the year.
verification of mortgage acquisition costs would be least likely to include examination
of related:
deed (rights and obligations)
in establishing existence and ownership of investment held by corporation in form of
stock, auditor should inspect the securities
confirm number of shares owned that are held by independent custodian
to test existence assertion: (vouching to support document)
-inspection
-external confirmation by issuer, custodian or counterparty
-reading partnership/agreement
a cutoff test of sales complements verification of
A/R
sales cutoff - obtains assurance that receivables are recorded in appropriate period
(examine sales and receivables recorded days before and after cutoff date and compare
them with sales invoices and shipping documents to assure they've been recorded in proper
period)
auditor who wishes to test for occurrence of equity transactions should complete:
vouch entries to supporting documents
, CIA EXAM PART 2.FINAL TEST 2026\2027.
during audit of a company's equity accounts, auditor determines whether restrictions
have been imposed on R/E resulting from loans, agreements or state law. audit
procedure most likely is intended to verify relevant assertion about:
classifications and understandability
An engagement objective is to determine if a company's accounts payable contain all
outstanding liabilities. Which of the following audit procedures would not be relevant
for this objective?
vouching A/P listing to supporting documents (tests existence instead of completeness)
fraud detection:
purchasing agent acquired items for personal use with organization's funds and
picked up items at vendor's warehouse
supervisors routinely signed authorization sheet without reviewing supporting docs.
procedures for fraud detection:
performing trend analysis of expenses
A population of entries in the fixed assets file from the current period and the next
period is an appropriate population to sample if the audit objective is to determine
whether
expenditures for fixed assets have been recorded in proper period
An audit found that the cost of some material installed on capital projects had been
transferred to the inventory account because the capital budget had been exceeded.
Which of the following would be an appropriate technique for the internal audit
activity to use to monitor this situation?
review JE that transfer costs from capital to inventory accounts
An organization has outsourced many services, including waste collection, cafeteria,
and custodial services previously performed internally. Management requests an
evaluation of contract compliance and the overall performance of the organizations
performing the outsourced activities. Which of the following engagement procedures
is the least effective in accomplishing the engagement objectives?
comparison of identified activities for each outsourcer with best practices of others
