Get IIA-CIA-Part2 Exam Practice Questions - Real and Updated

Answer : A

In a consulting engagement agreement, it is crucial to clearly define the duties and responsibilities needed from management. This ensures that both the internal audit team and the management are aligned on their roles and what is expected from each party. Clear delineation of responsibilities helps prevent misunderstandings and sets a solid foundation for the engagement's success. Reference:

IIA Standards - 2201: Planning Considerations

IIA Practice Guide - Consulting Services

Answer : B

External benchmarking using trend analysis involves comparing a company's performance metrics with industry standards or averages over a certain period to identify trends and areas for improvement. Comparing common-size financial statements of the subsidiary with the averages of the industry for the last two periods allows for a normalized comparison by expressing financial statement items as a percentage of a common base figure (e.g., total assets or sales). This method highlights the subsidiary's financial structure and performance trends in relation to industry norms, facilitating a comprehensive analysis. Reference:

'Internal Auditing: Assurance & Advisory Services' (The Institute of Internal Auditors)

'Benchmarking: An Essential Tool for Assessment, Improvement, and Market Leadership' (Michael J. Spendolini)

Answer : B

Physically inspecting a sample of completed processing cycles for defective products provides direct evidence of the effectiveness of the quality control process. This method allows the internal auditor to observe firsthand whether defective products are being identified and removed prior to shipment, ensuring that the process operates as intended. This approach is more reliable than survey results or management reports, which may be subject to bias or inaccuracies. Reference:

The Institute of Internal Auditors (IIA) - Standards for the Professional Practice of Internal Auditing, Standard 2320 - Analysis and Evaluation

Answer : D

According to the International Standards for the Professional Practice of Internal Auditing (Standards) set by the Institute of Internal Auditors (IIA), internal audit functions are allowed flexibility in including consulting engagements in their annual plans. Standard 2010 -- Planning states that 'the chief audit executive must establish a risk-based plan to determine the priorities of the internal audit activity, consistent with the organization's goals.' This risk-based plan should consider the potential value-add of consulting engagements. Consulting engagements that are expected to add significant value or align with strategic objectives are often included, but not all requests need to be automatically included unless they meet these criteria. Reference:

Institute of Internal Auditors (IIA), International Standards for the Professional Practice of Internal Auditing (Standards), Standard 2010 -- Planning.

Answer : D

The step that would accomplish the objective of testing management's identification and prioritization of critical data collected by the organization is to document and test a data inventory and classification program by determining the data classification levels and framework. This involves verifying that management has established a comprehensive data inventory and that data classification processes are in place and effectively implemented. It ensures that data is appropriately categorized based on its criticality and sensitivity, aligning with the organization's risk management framework and data governance policies. Reference: IIA's Global Technology Audit Guide (GTAG) on Data Privacy and Protection, which outlines best practices for data classification and management.