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IIA-CIA-Part2 exam is an essential certification that focuses on the Practice of Internal Auditing. IIA-CIA-Part2 Exam is designed to evaluate the candidate's knowledge and expertise in the field of internal auditing. Practice of Internal Auditing certification is offered by the Institute of Internal Auditors (IIA) and is recognized worldwide.

IIA Practice of Internal Auditing Sample Questions (Q541-Q546):

NEW QUESTION # 541
An organization s inventory is stored m multiple warehouses. During an inventory audit which of the following activities would most benefit from the use of computerized audit tools?

A. Confirming that the purchased items are recorded In the correct period
B. Verifying the existence of inventory items in each warehouse
C. Assigning the tolerable deviation rate to determine the sample size
D. Valuating the obsolete Inventory from all the warehouse locations

Answer: D

Explanation:
During an inventory audit, the activity that would most benefit from the use of computerized audit tools (CAATs) is valuating the obsolete inventory from all the warehouse locations. CAATs can efficiently analyze large volumes of inventory data from multiple warehouses, identify patterns and trends, and automate the valuation process, making it more accurate and less time-consuming compared to manual methods.
References:
* IIA Standards: 1210.A3 - Proficiency in the Use of CAATs
* IIA Practice Guide: Use of Technology in Auditing

NEW QUESTION # 542
While auditing an organization's credit approval process, an internal auditor learns that the organization has made a large loan to another auditors relative. Which course of action should the auditor take?

A. Have the chief audit executive and management determine whether the auditor should continue with the audit engagement.
B. Immediately withdraw from the audit engagement
C. Proceed with the audit engagement, but do not include the relative's information.
D. Disclose in the engagement final communication that the relative Is a customer

Answer: A

Explanation:
* Identify the Conflict of Interest: The internal auditor learns about a large loan made to another auditor's relative, which represents a conflict of interest.
* Refer to Professional Standards: According to the Institute of Internal Auditors' (IIA) standards, an internal auditor must maintain objectivity and avoid conflicts of interest (IIA Standard 1100 - Independence and Objectivity).
* Escalate the Issue: The appropriate course of action is to escalate this matter to the chief audit executive (CAE) and management, as they are responsible for determining the impact of the conflict and the appropriate response.
* Decision Making: The CAE and management will assess whether the conflict of interest could impair the auditor's objectivity and decide whether the auditor should be removed from the engagement or if additional oversight is needed.
* Documentation: It is important to document the conflict and the decision-making process in the audit documentation for transparency and accountability.
References:
The IIA's International Standards for the Professional Practice of Internal Auditing, specifically Standard
1100 on Independence and Objectivity.

NEW QUESTION # 543
A bank uses a risk analysis matrix to quantify the relative risk of auditable entities. The analysis involves rating auditable entities on risk factors using a scale of 1 to 10, with 10 representing the greatest risk. A partial list of risk factors and the ratings given to three of the bank's departments is provided below:

Which of the following statements regarding risk in the department is true?

A. The relative ranking of the departments in order of their risk, from greatest to least risk, is: A; C; B.
B. The nature of department A's control structure may be justified by the nature of the department's assets and the complexity of its transactions.
C. As compared to departments A and C, department B has a stronger control system to compensate for the greater complexity of the department's transactions and dollar value of its assets.
D. The internal audit activity should schedule audits of department B more often than audits of department C because of the relative control strength of department C as compared to department B.

Answer: B

Explanation:
Section: Volume C
Explanation/Reference:

NEW QUESTION # 544
An organization contracted a third party to construct a new facility that was estimated to cost $25 million. Which of the following is the most pertinent reason for the organization to audit the contractor's records?

A. The contractor will be paid on a cost-plus basis.
B. The contract includes a right-to-audit clause.
C. The contractor has subcontracted much of the work.
D. The estimated cost is high.

Answer: A

Explanation:
Section: Volume B

NEW QUESTION # 545
Which of the following statements best describes the difference between risk appetite and risk tolerance?

A. Risk appetite refers to the degree of risk acceptance for a particular objective, while risk tolerance is one approach to risk management
B. Risk appetite refers to an organization's general level of acceptance, while risk tolerance is a more specific and subordinate concept
C. There is no significant difference between the two terms
D. Risk appetite applies to specific objectives, while risk tolerance refers to an organization's general attitude toward risk.

Answer: B

Explanation:
* Definition of Risk Appetite: Risk appetite is the amount and type of risk an organization is willing to pursue or retain to achieve its objectives. It reflects the organization's overall approach to risk-taking and is typically articulated at the highest level of the organization.
Reference: COSO's Enterprise Risk Management Framework.
Definition of Risk Tolerance: Risk tolerance refers to the acceptable variation relative to the achievement of specific objectives. It is more granular and specific than risk appetite, detailing the levels of risk that are acceptable within the parameters set by the organization's risk appetite.
Reference: IIA's Practice Guide on Risk Management.
Distinguishing the Two Concepts: Risk appetite is broad and sets the overall boundaries for risk-taking, while risk tolerance is more specific, outlining acceptable risk levels for particular objectives within the broader risk appetite framework.
Practical Example: An organization may have a high risk appetite, accepting significant risks to achieve growth, but its risk tolerance for operational risks (such as system failures) may be low, indicating minimal acceptable deviations from expected performance.
Conclusion: The correct answer is C, as risk appetite represents the organization's general level of risk acceptance, whereas risk tolerance is more specific and detailed, falling under the broader scope of risk appetite.

NEW QUESTION # 546
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Practice of Internal Auditing Online Questions - Outstanding Practice To your IIA-CIA-Part2 Exam

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IIA Practice of Internal Auditing Sample Questions (Q541-Q546):

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