IIA Updated IIA-CIA-Part2 Exam Questions and Answers by ziggy

The primary reasons for outsourcing internal audit activities typically include accessing a wider range of skills and competencies, complementing existing expertise for specific engagements, and strengthening core audit functions. Contingency planning, while beneficial, is not a primary reason for outsourcing internal audit activities as it pertains more to risk management strategies rather than the core objectives of outsourcing. References: = IIA’s Practice Advisory 1210.A1-1: Obtaining External Service Providers to Support or Complement the Internal Audit Activity.

Reperformance is a CAATs approach that involves independently executing the same procedures as the original process to verify the accuracy of the application’s calculations. This approach maximizes the use of CAATs because it directly tests the functionality and reliability of the system by ensuring that the system processes transactions and calculations correctly, as intended by management.

IIA References:

IIA Standard 1220: Due Professional Care suggests that internal auditors should apply appropriate techniques, such as CAATs, to obtain sufficient evidence. Reperformance as a CAATs method is particularly effective in verifying the integrity of system calculations.

The Practice Guide on Using CAATs highlights that reperformance is one of the most powerful techniques for validating that a system operates as intended and that transactions are processed correctly.

The observation in question includes the condition ("no approved credit risk management policy" and "17 out of 50 contacts showed clients with a poor credit history") and the cause (the subsidiary concluding contacts with high-risk clients). However, it lacks the effect, which should explain the potential or actual impact of this deficiency on the organization (e.g., financial losses, increased credit risk). Additionally, it is missing the criteria, which should reference the specific rules or policies that are not being followed (e.g., the organization’s credit risk management policy requirements). Including these components would provide a complete and actionable observation.References:

The Institute of Internal Auditors (IIA) - Practice Guide: Audit Reports and Working Papers

Vouching is the manual audit approach that involves testing the validity of a document by following it backward to a previously prepared record. This method helps auditors verify the authenticity and accuracy of transactions by tracing them back to their source documents, such as invoices, receipts, or purchase orders. Vouching is commonly used to detect errors or fraud.

References:

The Institute of Internal Auditors (IIA) Standards

Auditing Techniques and Procedures