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| Topic | Details |
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| Topic 1 | - Practice of Internal Auditing: This domain covers strategies and policies related to planning, organizing, controlling of internal audit processes, and understanding administrative activities such as resourcing, recruiting, and staffing. Moreover, this domain covers goals of engagement and assessment criteria in addition to planning the engagement to ensure the identification of key risks and controls.
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| Topic 2 | - Essentials of Internal Auditing: This domain has topics such as foundations of internal auditing, independence aconcept of governance and CSR.nd objectivity, Proficiency and Due Professional Care, QA, and Managing Risks. The domain covers describing the
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| Topic 3 | - Business Knowledge for Internal Auditing: This domain covers the vital planning phases and efforts and common performance measures. It also includes ways for management to effectively lead and counsel people to increase their commitment. Also, the domain covers financial accounting and managerial accounting fundamentals and the treatment of various costs.
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IIA Qualified Info Systems Auditor CIA Challenge Exam Sample Questions (Q162-Q167):
NEW QUESTION # 162
Following an IT systems audit, management agreed to implement a specific control in one of the IT systems. After a period, the internal auditor followed up and learned that management had not implemented the agreed management action due to the decision to move to another IT system that has built-in controls, which may address this risks highlighted by the Internal audit Which of the following Is the most appropriate action to address the outstanding audit recommendation?
- A. The auditor accepts managements explanation that the previously identified issue is adequately addressed by the new IT system, as management understands the concern and is most knowledgeable about the new system, and closes the outstanding issue.
- B. The auditor examines the system documentation of the new system to verify that the risk has been addressed in the new system, then reports to senior management the closure of the issue.
- C. The auditor requires management to provide details regarding the process for selecting the new IT system and whether other systems were evaluated, and closure of the issue would depend on the new information provided.
- D. The auditor advises management that replacing the IT system does not dismiss the prior obligation to implement the agreed action plan, and escalates the issue to senior management and the board.
Answer: B
Explanation:
Verification of Controls: The auditor should verify that the new IT system addresses the previously identified risks. This involves reviewing the system documentation and ensuring that the controls in the new system effectively mitigate the risks.
NEW QUESTION # 163
What would be the effect if an organization paid one of its liabilities twice during the year, in error?
- A. Assets, net income, and owners' equity would be understated, but liabilities would be overstated
- B. Assets and liabilities would be understated.
- C. Assets, net income, and owners' equity would be unaffected
- D. Assets, liabilities, and owners' equity would be understated.
Answer: A
Explanation:
If an organization pays one of its liabilities twice, its assets (cash) would be reduced more than necessary. This results in an understatement of net income and owners' equity because the additionalpayment is an expense that should not have been recorded. Liabilities would be overstated because the duplicate payment does not reduce the liability correctly.
References:
* "Financial Accounting Principles," which discusses the impact of errors on financial statements.
NEW QUESTION # 164
According to IIA guidance, which of the following best describes the purpose of a planning memorandum for an audit engagement?
- A. It documents existing measures that manage risks in the area under review
- B. It documents the audit steps and procedures to be performed.
- C. It documents events that could hinder the achievement of process objectives.
- D. it documents preliminary information useful to the audit team.
Answer: B
Explanation:
The planning memorandum serves as a comprehensive blueprint for an audit engagement, outlining the specific steps, procedures, and strategies that will be employed to carry out the audit. According to IIA guidance, the purpose of this document is to ensure that the audit team is well-prepared and that the audit process is systematic and thorough.
Documentation of Audit Steps and Procedures: The primary purpose of a planning memorandum is to detail the steps and procedures that the audit team will follow. This ensures consistency and clarity throughout the audit process and provides a clear framework for team members to follow.
Preparation and Coordination: It serves as a preparatory document that helps in coordinating the activities of the audit team, ensuring that everyone is aware of their roles and responsibilities.
Practical Example: If an audit is being conducted on the financial reporting processes, the planning memorandum would include specific procedures for testing internal controls over financial reporting, timelines for each phase of the audit, and responsibilities assigned to each team member.
Risk Management: While it includes information on preliminary risks, its main focus is on documenting the audit steps rather than managing risks or existing measures, which would be covered in other documents or sections of the audit plan.
NEW QUESTION # 165
A bicycle manufacturer incurs a combination of fixed and variable costs with the production of each bicycle.
Which of the following statements is true regarding these costs?
- A. if the number of bicycles produced is increased by 15 percent, the variable cost per unit will increase proportionally
- B. The fixed cost per unit will vary directly based on the number of bicycles produced during the production cycle.
- C. if the number of bicycles produced is increased by 30 percent, the fixed cost per unit will decline.
- D. The total variable cost will vary proportionally and inversely with the number of bicycles produced during a production run.
Answer: C
Explanation:
* Introduction:
* Understanding cost behavior is crucial in managing production and financial performance in manufacturing.
* Cost Characteristics:
* Fixed costs remain constant in total but vary per unit with changes in production volume.
* Variable costs vary directly with production volume but remain constant per unit.
* Options Analysis:
* Option A: Variable costs per unit remain constant regardless of production volume.
* Option B: Fixed costs per unit decrease as production volume increases, not directly.
* Option C: Total variable costs vary directly with production volume, not inversely.
* Option D: Fixed costs per unit will decline as the number of units produced increases due to the spreading of fixed costs over a larger number of units.
* Conclusion:
* When production increases by 30%, the fixed cost per unit will decline as the same total fixed cost is allocated over a greater number of units.
NEW QUESTION # 166
Internal auditors map a process by documenting the steps in the process, which provides a framework for understanding Which of the following is a reason to use narrative memoranda?
- A. To identify individuals who perform key roles
- B. To document which outputs support other activities.
- C. To explain a simple process.
- D. To create a detailed risk assessment
Answer: C
Explanation:
Introduction:
Internal auditors use process mapping to document and understand the steps involved in a process.
Purpose of Narrative Memoranda:
Narrative memoranda are written descriptions that outline the steps of a process, often used when the process is straightforward.
NEW QUESTION # 167
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