IIA IIA-CIA-Part3 Questions Answers

Even when outsourcing the internal audit function, the organization retains responsibility for ensuring the internal audit activity complies with the Standards. This includes maintaining a QAIP to assess effectiveness and quality. The provider executes the function, but the CAE and the organization’s oversight bodies remain accountable for quality.

Options B and C are incorrect since internal and external assessments may be performed by the provider, but ultimate responsibility rests with the organization. Option D (postponement) would violate the Standards.

 Understanding Resource Coordination in Project Management:

Resource coordination involves assigning and managing human, financial, and technological resources to ensure the project runs smoothly.

The Execution phase is when project plans are implemented, and resources are actively utilized.

 Why Execution?

During execution, the project manager must coordinate resources, monitor performance, and resolve conflicts to keep the project on track.

This phase involves managing teams, distributing tasks, and ensuring resources are used efficiently.

 Why Other Options Are Incorrect:

A. Initiation: Focuses on defining project objectives, scope, and feasibility but does not involve active resource coordination.

B. Planning: Deals with creating resource allocation plans but does not handle real-time coordination.

D. Monitoring: Involves tracking performance and making adjustments but does not actively assign or manage resources.

 IIA Standards and References:

IIA Practice Guide: Auditing Project Management (2020): Recommends evaluating resource management practices during the execution phase.

IIA Standard 2110 – Governance: Internal auditors should ensure project resources are managed effectively to achieve objectives.

PMBOK Guide – Project Resource Management: Specifies that resource coordination primarily happens in the execution phase.

Data analysis in internal auditing allows auditors to assess large volumes of data, identify trends, and uncover anomalies, leading to a more comprehensive understanding of the audit area.

Definition and Role of Data Analysis in Auditing:

Data analytics in internal auditing involves using software and algorithms to analyze vast datasets for fraud detection, risk assessment, and control effectiveness.

The IIA’s GTAG on Continuous Auditing emphasizes that data-driven audits enhance visibility into operations, supporting risk-based auditing.

Why a More Holistic View?

Data analytics allows internal auditors to:

Identify patterns and trends across the entire audit area.

Detect fraud and anomalies more efficiently.

Assess risks across multiple departments simultaneously.

As per IIA Standard 1220 (Due Professional Care), auditors must consider the use of technology-based audit techniques to improve their audit scope.

Why Not Other Options?

A. It easily aligns with existing internal audit competencies to reduce expenses:

While data analytics can reduce costs, its primary benefit is enhanced audit scope and effectiveness, not just cost-cutting.

C. Its outcomes can be easily interpreted into audit conclusions:

Data analytics can enhance audit conclusions, but the interpretation still requires auditor expertise.

D. Its application increases internal auditors' adherence to the Standards:

While data analytics aligns with IIA Standards, it is not the main reason for its adoption.

IIA GTAG – Continuous Auditing: Implications for Assurance & Monitoring

IIA Standard 1220 – Due Professional Care

IIA Standard 2120 – Risk Management

Step-by-Step Justification:IIA References:Thus, the correct and verified answer is B. It provides a more holistic view of the audited area.

Activity-Based Costing (ABC) is a cost allocation method that assigns overhead costs based on activities that drive costs rather than using a single volume-based measure like labor hours or machine hours. It provides a more accurate allocation of indirect costs to products or services.

ABC Costing and Its Flexibility (Correct Answer: C)

ABC can be applied to both job order costing (which tracks costs for individual products or projects) and process costing (which tracks costs across continuous production processes).

IIA Standard 2120 – Risk Management suggests that internal auditors evaluate whether cost allocation methodologies align with business objectives and financial accuracy.

ABC improves cost accuracy by assigning overhead to specific activities, making it useful in different costing systems.

Why the Other Options Are Incorrect:

A. "ABC is similar to conventional costing in how it treats overhead allocation." (Incorrect)

Traditional costing allocates overhead based on a single cost driver, such as direct labor or machine hours.

ABC allocates overhead based on multiple activity drivers, making it more precise.

B. "ABC uses a single unit-level basis to allocate overhead." (Incorrect)

ABC does not rely on a single unit-level measure.

Instead, it uses multiple cost drivers at different levels (unit-level, batch-level, product-level, and facility-level).

D. "The primary disadvantage of ABC is less accurate product costing." (Incorrect)

ABC is actually more accurate than traditional costing in assigning overhead costs.

The primary disadvantages of ABC are its complexity and cost of implementation, not reduced accuracy.

IIA Standard 2120 – Risk Management (Assessing the appropriateness of costing methodologies)

IIA Standard 2130 – Compliance (Ensuring financial management practices align with standards)

IIA Standard 2210 – Engagement Objectives (Evaluating financial controls and cost allocation methods)

Step-by-Step Justification:IIA References for This Answer:Thus, the best answer is C. An ABC costing system may be used with either a job order or a process cost accounting system, as ABC is flexible and can be applied in both costing environments.