IIA-CIA-Part1 Exam Dumps - IIA CIA Questions and Answers

Internal controls are mechanisms put in place to reduce the probability or impact of risks affecting the organization's objectives. They do not eliminate risks entirely (which would be avoidance) nor do they transfer or share the risk (as in risk sharing); rather, they mitigate risks to more acceptable levels.

Institute of Internal Auditors (IIA) - Guidance on Risk Assessment in Practice

Understanding the corporate culture is fundamental for an internal auditor assessing the opportunity for fraud within an organization. Corporate culture influences how rules, norms, and behaviors are developed and enforced. It provides context to the risk environment and the potential for fraud to occur, facilitating more targeted and effective audit strategies focused on fraud risks.

Institute of Internal Auditors (IIA) - International Professional Practices Framework (IPPF)

Exercising due professional care means ensuring that audit procedures are sufficient to meet the audit objectives and identify all significant risks. Ensuring that the work program is appropriately designed to identify all risks surrounding the payroll process demonstrates due professional care, as it involves planning and performing the audit with diligence and thoroughness.

Option B: Determining compliance with laws is part of due professional care but not as comprehensive as designing the work program to identify all risks.

Option C: Verifying internal controls implementation is part of the audit scope but does not fully encompass due professional care in planning and executing the audit.

Option D: Consulting with the risk manager is a good practice but does not substitute for the auditor's responsibility to plan and perform the audit.

IIA Standard 1220: Due Professional Care.

IIA Practice Guide: Due Professional Care.

Input controls are designed to ensure the accuracy, completeness, and validity of data entered into a business application. These controls can include validation checks, input masks, and error detection methods that verify data at the point of entry. Whether data is entered directly by staff, remotely by business partners, or through web-enabled applications, input controls help maintain the integrity of the data by preventing errors and unauthorized input. These controls are crucial in maintaining data quality and integrity in any business application.

The IIA’s Global Technology Audit Guide (GTAG) on Information Technology Controls.

COBIT 5 Framework on Information and Technology Governance.

The current state of conformance with the Standards for the internal audit activity would be considered as "Nonconformance with the Standards." This assessment is based on the most recent internal assessment, which showed nonconformance. According to IIA standards, the results of the latest quality assurance review are critical in determining conformance, and any finding of nonconformance indicates that the internal audit activity currently does not meet the Standards, despite previous external assessments to the contrary.

IIA Standard 1300: Quality Assurance and Improvement Program and related interpretation guidelines.

Appropriate disclosure of nonconformance with the Standards is demonstrated when the chief audit executive (CAE) discusses with the board issues regarding the internal audit activity performing an IT engagement without proper skills and knowledge. This direct communication with the board about significant issues affecting the internal audit function’s ability to conform to professional standards is crucial for ensuring accountability and transparency.

IIA Standards on communication and disclosure of nonconformance.

Being denied access to necessary information such as expenditure and budget reports because they are considered confidential affects the authority of the internal audit activity. Authority, as granted by the audit charter, should include unrestricted access to all records and data required by the audit team to perform its duties effectively. Limitations on access impair the audit's scope and the auditors' ability to conduct thorough and complete audits. References: IIA Standard 1110: Organizational Independence, which stresses the importance of internal auditors having appropriate and unrestricted access to information.

The activity of requiring all employees in the IT department to attend annual training on the department’s mission, values, and key performance measures is designed to prevent communication failure. This type of training ensures that all employees are aware of and understand the department's goals and objectives, which is crucial for maintaining effective communication and ensuring that everyone is aligned with the department’s mission.

Institute of Internal Auditors (IIA) - International Professional Practices Framework (IPPF)

Reporting functionally to the CEO can promote internal audit objectivity. This arrangement helps ensure that the Chief Audit Executive (CAE) has the necessary independence from the areas being audited and sufficient authority to carry out audit responsibilities effectively. While ideally, the CAE should report functionally to the board for maximum objectivity, reporting to the CEO is a common practice that supports operational independence from direct operational management, such as the CFO or COO.

IIA guidance on reporting lines and independence.

Given that the CFO dismissed the concern due to a lack of understanding of the data analytics test and the perceived insignificance of the transaction, the internal auditor should improve soft skills, specifically communication and negotiation. Enhancing these skills would help the auditor better explain the significance of findings and persuade management of the need to address such issues, regardless of transaction value.

Institute of Internal Auditors (IIA) - Competency Framework for Internal Auditors

A chief audit executive failing to perform a risk assessment prior to preparing the audit plan demonstrates nonconformance with the Standards. According to IIA standards, specifically Standard 2010 – Planning, a risk assessment must inform the audit plan, ensuring that resources are appropriately directed towards areas of higher risk. References: IIA Standard 2010: Planning, which mandates the requirement for risk assessments in audit planning.

Due professional care required of internal auditors includes considering the cost of assurance in relation to potential benefits. This reflects the need to balance resource expenditure against the significance and risk of the audit area, ensuring that audit efforts are both efficient and effective. This principle is a fundamental aspect of professional judgment and prudent decision-making in internal auditing.

IIA Standard on Due Professional Care.

Risk analysis involves assessing both the impact and likelihood of risks, and these should be assessed together. This combined assessment helps in understanding the full scope of potential risks and is crucial for effective risk management and prioritization.

IIA guidance and risk management frameworks like COSO and ISO 31000.QUESTION NO: 459

According to IIA guidance, which of the following statements is true with regard to the chief audit executive's (CAE's) responsibility for conducting a self-assessment of the internal audit activity?

1 The CAE should select an independent reviewer or review team to perform sufficient tests of the self-assessment to validate the results

2 The CAE should validate results by engaging experienced audit professionals from a separate internal audit activity outside of the organization to reperform all of the tests conducted for the assessment

3. The CAE should select independent, nonaudit professionals who are knowledgeable about the organization and the industry in which it operates to assist with performing the self-assessment

4. The CAE may consider performing a self-assessment with independent external validation in Iieu of performing a full external assessment

A. 1 and 2 only.

B. 1 and 4 only

C. 1, 2, and 3

D. 3 and 4

Answer: B

According to IIA guidance, the chief audit executive (CAE) may consider performing a self-assessment with independent external validation in lieu of performing a full external assessment. This is known as a self-assessment with independent validation (SAIV) and is acceptable as a part of the internal audit activity’s quality assurance and improvement program. Choosing an independent reviewer or review team to perform sufficient tests of the self-assessment to validate the results is also aligned with IIA standards for maintaining quality within the internal audit function.References: IIA Standard 1300: Quality Assurance and Improvement Program, which outlines requirements for ongoing and periodic reviews of the internal audit activity.

An internal auditor exercises due professional care by enhancing knowledge, skills, and other competencies through ongoing professional development. This action is essential to maintain the necessary proficiency and competency in performing audit tasks, thereby ensuring the quality and effectiveness of the audit work aligns with professional standards and meets the evolving needs of the organization.

Institute of Internal Auditors (IIA) - International Professional Practices Framework (IPPF)

Internal assessments are part of an internal audit activity’s quality assurance and improvement program that requires ongoing monitoring to evaluate the internal audit activity's efficiency and effectiveness. These ongoing assessments help in continuously improving the performance and value of the internal audit function by ensuring that it operates effectively and adapts to changes in organizational needs and conditions.

Institute of Internal Auditors (IIA) - International Professional Practices Framework (IPPF)