IIA-CIA-Part2 Exam Dumps - Practice of Internal Auditing

According to IIA guidance, interim reports are typically produced during lengthy audit engagements that involve several organizational units. These reports help keep management informed about the progress of the audit, highlight any significant issues identified early on, and allow for timely corrective actions. Interim reports facilitate communication between the internal audit activity and management, ensuring that any critical issues are addressed promptly rather than waiting for the final report.

References:

The Institute of Internal Auditors (IIA) Practice Guide on "Audit Reports"

IIA Standard 2410 – Criteria for Communicating: "Interim reports may be used to communicate information and issues that require immediate attention."

When preparing a detailed risk assessment during engagement planning, the internal auditor should collaborate with the management of the function being reviewed. Management has the most in-depth knowledge of their business objectives, processes, and the associated risks. This cooperation ensures that the risk assessment is comprehensive, accurate, and relevant to the specific context of the function under review. It also helps in identifying any potential areas of concern that might not be evident to external parties.

References:

IIA Standard 2201: "Planning Considerations"

IIA Practice Guide: "Assessing the Adequacy of Risk Management Processes"

Preparing a detailed audit program is a critical component of engagement planning. This program outlines the specific procedures and tests that the internal auditor will perform to evaluate the effectiveness of controls. It ensures that the audit is conducted systematically and thoroughly, addressing all relevant risks and objectives. A detailed audit program provides a clear roadmap for the audit, helping to ensure that all necessary areas are covered and that the audit's objectives are achieved.References:

The Institute of Internal Auditors (IIA) - Standards for the Professional Practice of Internal Auditing, Standard 2201 - Planning Considerations

The statement that the risk management process supports internal audit by evaluating whether critical controls are adequate and effective is true. The risk management process provides a framework for identifying, assessing, and managing risks, and internal audit uses this information to evaluate the adequacy and effectiveness of controls in place to mitigate those risks. This support helps internal audit focus on areas of high risk and ensure that controls are functioning as intended.

References:

IIA Standards: 2120 - Risk Management

IIA Practice Guide: Assessing the Adequacy of Risk Management Processes

Step-by-Step Detailed Explanation:

A. Review a random sample of concluded disciplinary reports to assess how the policy was applied in each case:This is the correct answer because reviewing documented reports provides objective evidence of whether decisions complied with policies. This approach ensures that the auditor relies on concrete evidence rather than subjective opinions or observations.

B. Interview a sample of impacted employees for their opinions on the clarity and fairness of the policy:While employee feedback is valuable, it is subjective and does not provide sufficient evidence of compliance with the documented policy.

C. Observe several disciplinary hearings to determine whether they are in compliance with the policy:Observations are limited to current proceedings and do not account for how policies were applied in past cases, making this approach less comprehensive.

D. Conduct an interview to assess the disciplinary hearing chairman’s understanding of the policy and its appropriate use:Interviews provide insight into understanding and intent but do not offer evidence of actual compliance.

CIA Exam Syllabus Reference:

Domain V: Performing Internal Audit Services – Evidence Collection and Assessment Methods.

The chief audit executive (CAE) typically performs several activities following an audit engagement, including reporting follow-up activities to senior management, implementing follow-up procedures to evaluate residual risk, and evaluating the extent of improvements. These activities are crucial to ensure that audit recommendations are properly addressed and that any residual risks are managed effectively. However, determining the costs of implementing the recommendations is not typically a responsibility of the CAE. This task is usually handled by the management of the area being audited, as they have the detailed operational knowledge necessary to accurately estimate these costs. References:

The IIA’s International Standards for the Professional Practice of Internal Auditing (Standards), specifically Standard 2500 - Monitoring Progress.

The IIA’s Practice Guide on Follow-up Processes.

A finding can be removed from the final audit report if management provides additional information that accurately contradicts the initial findings. This indicates that the initial findings may have been based on incomplete or incorrect information. Disagreements (Option A) or beliefs about the insignificance (Option D) of the finding do not justify removal unless they are supported by new, contradicting evidence. Even if corrective actions are already taken (Option B), the original finding may still be relevant for documentation and historical context.References:

IIA Standard 2410: Criteria for Communicating.

IIA Practice Guide on Communicating Results.

Ensuring the quality of an audit engagement, especially a consulting engagement in a complex area like human resources, requires effective supervision and quality assurance measures. Peer review during fieldwork is a recognized method for maintaining high-quality audit work.

IIA Standard 2340 – Engagement Supervision:

This standard requires that engagements be properly supervised to ensure that objectives are achieved, quality is maintained, and audit work is consistent with IIA standards. Peer reviews during fieldwork can help identify issues early and improve the overall quality of the audit.

Fieldwork Peer Review:

Quality Assurance: Peer reviews involve having another auditor review the work performed during fieldwork. This process helps identify any potential issues or improvements in real-time, ensuring that the final work product meets the required standards.

Continuous Improvement: By incorporating peer reviews, the internal audit activity can ensure that best practices are followed, and any deviations from the standard audit process are corrected promptly.

IIA Practice Advisory 2340-1:

This advisory recommends peer reviews as a method to ensure quality and to provide feedback to auditors on their work, enhancing the effectiveness of the engagement.

Option A (Assign an experienced manager): While supervision is essential, peer reviews provide additional quality checks beyond just monitoring by a manager.

Option C (Standardized work program): This ensures consistency but may not be sufficient to ensure quality without additional review mechanisms.

Option D (CAE personally supervising): This is not the most efficient use of the CAE’s time. Peer review distributes the supervisory load and adds value through diverse perspectives.

Detailed Explanation:Why Not Other Options?Conclusion: Option B is correct as it aligns with best practices for quality assurance in internal auditing, particularly in ensuring the effectiveness and efficiency of the engagement through peer reviews during fieldwork.