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

One of the five basic financial statement assertions that an internal auditor evaluates when assessing controls over financial reporting is "existence or occurrence." This assertion verifies that assets, liabilities, and equity interests actually exist at a given date, and that recorded transactions have actually occurred during a given period. It ensures that the financial statements are not overstated through the inclusion of fictitious or erroneous items.

References:

COSO Framework

PCAOB Auditing Standard No. 15: Audit Evidence

When planning the first audit of IT shared services, it is typical to evaluate entity-level controls first. Entity-level controls are overarching controls that affect the entire organization and are foundational for ensuring that specific application and transaction controls operate effectively. These controls include the organization's governance, risk management processes, and the overall control environment. Assessing entity-level controls provides a broad understanding of the control environment and highlights any pervasive issues that might impact more detailed areas of the audit.References: The IIA's Global Technology Audit Guide (GTAG) and COSO's Internal Control - Integrated Framework.

The chief audit executive (CAE) is responsible for the approval of the engagement objectives and scope in internal auditing. While senior management, the head of customer service, and the board of directors may provide input and have interests in the audit engagement, it is ultimately the CAE who has the final authority to approve the objectives and scope. This ensures that the internal audit activity remains independent and that the engagement aligns with the overall audit plan and organizational priorities.

References:

The Institute of Internal Auditors (IIA) Standard 2010 - Planning

IIA Standard 2200 - Engagement Planning

When identifying specific processes to include in the scope of an assurance engagement, the most useful information for an internal auditor is recent area performance indicators against productivity metrics. This data helps the auditor identify areas with potential risks or inefficiencies that might warrant further examination.

IIA Standard 2200 – Engagement Planning:

This standard requires auditors to develop a plan for each engagement, including objectives and scope, based on a thorough understanding of the area under review. Performance indicators provide valuable insights into areas that may not be meeting productivity or efficiency targets.

Use of Performance Indicators:

Performance indicators allow the auditor to identify processes that may be underperforming or where there may be significant variances from expected outcomes. This helps in focusing the audit on areas with the greatest potential for improvement or risk.

IIA Practice Advisory 2201-2:

The advisory suggests that auditors should consider using performance data, such as productivity metrics, to determine where to focus their audit efforts. This data-driven approach ensures that the audit is relevant and adds value.

Option A (Recognition awards): Awards do not provide insight into risks or underperformance that might require audit attention.

Option B (Timing of the last audit): While useful, the timing alone does not indicate current risks or issues.

Option C (Management's presentation): This may provide some insights, but it is often more narrative and less data-driven than performance indicators.

Detailed Explanation:Why Not Other Options?Conclusion: Option D is correct because recent performance indicators against productivity metrics provide the most relevant information for identifying processes to include in the scope of an assurance engagement, ensuring that the audit is focused on areas of significant risk or opportunity for improvement, in line with IIA standards.