Free IIA-CIA-Part2 Practice Test Questions 2026

Which of the following would be considered a violation of The IIA’s mandatory guidance on independence?

A. The chief audit executive (CAE) reports functionally to the board and administratively to the chief financial officer

B. The board seeks senior managements recommendation before approving the annual salary adjustment of the CAE.

C. The CAE confirms to the board, at least once every five years, the organizational independence of the internal audit act/vity.

D. The CAE updates the internal audit charter and presents it to the board for approval periodically, not on a specific timeline

Which of the following measures immediate short-term liquidity?

A. Current ratio

B. Profit margin

C. Quick ratio

D. Times interest earned

According to IIA guidance,which of the following is true about the supervising internal auditor's review notes?

• They are discussed with management prior to finalizing the audit.

• They may be discarded after working papers are amended as appropriate.

• They are created by the auditor to support her fieldwork in case of questions.

• They are not required to support observations issued in the audit report.

A. 1 and 3 only

B. 1 and 4 only

C. 2 and 3 only

D. 2 and 4 only

Which of the following factors should be considered when determining the staff requirements for an audit engagement?

The internal audit activity's time constraints.

The nature and complexity of the area to be audited.

The period of time since the area was last audited.

The auditors’ preference to audit the area.

The results of a preliminary risk assessment of the activity under review.

A. 1 and 4 only.

B. 1, 2, and 5 only.

C. 2, 3, and 5 only.

D. 1, 2, 3, 4, and 5.

The newly appointed chief audit executive (CAE) of a large multinational corporation, with seasoned internal audit departments located around the world, is reviewing responsibilities for engagement reports. According to IIA guidance, which of the following statements is true?

A. The CAE is required to review, approve, and sign every engagement report.

B. The CAE is required to review, approve, and sign all regulatory compliance engagement reports only

C. The CAE may delegate responsibility for reviewing, approving and signing engagement reports, but should review the reports after they are issued.

D. The internal audit charter must identify authorized signers of engagement reports.

Which of the following statement is consistent with IIA guidance the use of mentoring for internal auditors?

A. The member and the internal auditor should opt for informal meetings even if it means that no formal documentation will be created.

B. The mentor relationship is usually not suitable for internal audit staff, as it does not leas to professional development.

C. The value of mentoring is derived primarily from the personal relationship between the two parties involved, and the mentor’s level of relevant experience should not be a key factor.

D. The mentor should be the internal auditor’s supervisor to ensure that the auditor performance is assessed in a relevant and meaningful context.

A chief audit executive (CAE) received a detailed internal report of senior management's internal control assessment. Which of the following subsequent actions by the CAE would provide the greatest assurance over management's assertions?

A. Assert whether the described and reported control processes and systems exist.

B. Assess whether senior management adequately supports and promotes the internal control culture described in the report.

C. Evaluate the completeness of the report and management's responses to identified deficiencies.

D. Determine whether management's operating style and the philosophy described in the report reflect the effective functioning of internal controls.

Which of the following is the most appropriate objective for establishing a professional development plan for the internal audit activity?

A. A plan that focuses on furthering the independence of the internal audit activity.

B. A plan that ensures internal auditors collectively possess expertise in various fields to avoid outsourcing.

C. A plan based on individual preferences and proposals, which helps internal auditors achieve greater success.

D. A plan that focuses on filling gaps in the current skills needed to complete audit objectives.

A manufacturing organization specializes in the production of evaporated milk and breakfast cereals. The manufacturing processes create significant loss in the form of waste and byproducts. The provision for normal production loss is known to senior management, but little action is taken when abnormal production losses occur. The organization sells its production byproducts to fish farmers at a reduced price. The byproducts are a widely recognized and used product in the fish farming industry. The organization has a policy that also allows its employees to purchase the byproducts at a negligible price. Based on the above, which of the following risks should the internal audit function consider when planning an engagement of the production process?

A. The production team may be incentivized to increase production losses.

B. The production team may work overtime and be overworked.

C. Increased misappropriation of finished products.

D. Risk that the finished product quality may be impaired.

In which of the following situations would an internal auditor consider the need to outsource competencies and skills9

A. During the inspection of a wind turbine. an internal auditor notices that some replaced parts took used According to purchase documents, the parts still have a long lifespan.

B. The auditor believes that the audit client's actions contradict the organization's code of conduct The audit client disagrees and says his actions are for the organization's benefit

C. An audit team member is allocated to conduct an assurance engagement m the sales unit. However, the same auditor performed an assurance engagement in that area just one year prior

D. During an inventory count, the auditor ascertained that some goods were missing. The audit client argues that the auditor does not understand how inventory should be counted

An audit client responded to recommendations from a recent consulting engagement. The client indicated that several recommended process improvements would not be implemented. Which of the following actions should the internal audit activity take in response?

A. Escalate the unresolved issues to the board, because they could pose significant risk exposures to the organization.

B. Confirm the decision with management and document this decision in the audit file.

C. Document the issue in the audit file and follow up until the issues are resolved.

D. Initiate an assurance engagement on the unresolved issues.

An internal auditor is assessing the organization's risk management framework. Which of the following formulas should he use to calculate the residual risk?

A. Option A

B. Option B

C. Option C

D. Option D