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

Bank confirmations are the most reliable source for verifying the current year-end bank balances. These confirmations are direct responses from the bank to the auditor, providing independent verification of the account balances as of the end of the year. This external confirmation is considered more reliable than internal documents like bank statements, reconciliations, or general ledger balances because it comes directly from a third-party source, ensuring its accuracy and completeness.References:

The Institute of Internal Auditors (IIA) - Practice Guide: External Confirmations

Auditing Standards (e.g., ISA 505 - External Confirmations)

According to the International Standards for the Professional Practice of Internal Auditing, the final audit report should be distributed to those responsible for the functions being audited (audit client management) and to those who oversee or are accountable for the audit function (executive management). Additionally, the chief audit executive (CAE) can approve distribution to other relevant stakeholders as necessary. This ensures that all relevant parties are informed and can take appropriate action based on the audit findings. References:

IIA Standards - 2410: Criteria for Communicating

IIA Practice Guide - Communication with the Board

A risk-by-process matrix is a tool that allows users to identify and analyze the associations between various business processes and the risks that affect them. This matrix helps in understanding how risks are distributed across different processes and can be instrumental in prioritizing audit activities based on risk.

IIA References:

IIA Standard 2210: Engagement Objectives suggests that internal auditors should consider risks when setting audit objectives. A risk-by-process matrix is an effective tool for mapping out these risks in relation to processes, providing a clear visual representation of where the most significant risks lie.

The Practice Guide on Risk Assessment outlines the use of matrices, including risk-by-process matrices, to facilitate the identification and prioritization of risks within different processes.

The observation provided in the final engagement communication includes the criteria (competitive bidding requirements), condition (three of the 10 contracts reviewed did not meet these requirements), and cause (senior management deemed these purchases critical and awarded them as sole-source). However, it lacks the effect, which would explain the potential consequences or impact of not meeting the competitive bidding requirements, such as increased costs, lack of transparency, or potential for favoritism. References:

The IIA’s International Standards for the Professional Practice of Internal Auditing (Standards), Standard 2410 - Criteria for Communicating.

The IIA’s Practice Guide on Communicating Results.