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| Topic 1 | - Business Knowledge for Internal Auditing: This domain covers the vital planning phases and efforts and common performance measures. It also includes ways for management to effectively lead and counsel people to increase their commitment. Also, the domain covers financial accounting and managerial accounting fundamentals and the treatment of various costs.
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| Topic 2 | - Practice of Internal Auditing: This domain covers strategies and policies related to planning, organizing, controlling of internal audit processes, and understanding administrative activities such as resourcing, recruiting, and staffing. Moreover, this domain covers goals of engagement and assessment criteria in addition to planning the engagement to ensure the identification of key risks and controls.
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| Topic 3 | - Essentials of Internal Auditing: This domain has topics such as foundations of internal auditing, independence aconcept of governance and CSR.nd objectivity, Proficiency and Due Professional Care, QA, and Managing Risks. The domain covers describing the
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IIA Qualified Info Systems Auditor CIA Challenge Exam Sample Questions (Q70-Q75):
NEW QUESTION # 70
What is the primary reason that audit supervision includes approval of the engagement report?
- A. To ensure report style and grammar are appropriate.
- B. To ensure report findings are substantiated
- C. To ensure the objectives of the area under review are met
- D. To ensure senior management supports the reports conclusions
Answer: B
Explanation:
The primary reason for audit supervision, including the approval of the engagement report, is to ensure that the findings presented in the report are substantiated by adequate and appropriate evidence. This step is crucial to maintain the credibility and reliability of the audit process and its outcomes.
* Substantiation of Findings: Ensuring that findings are substantiated helps in providing a clear and defensible basis for the conclusions and recommendations made in the report.
* Audit Quality: This step ensures the quality and integrity of the audit process, confirming that the evidence collected during the audit is sufficient and appropriate to support the findings.
* Credibility: By substantiating findings, the report gains credibility, which is essential for the stakeholders who rely on the audit report for decision-making.
References:
* "Internal Audit Standards and Procedures," which outlines the importance of evidence substantiation in audit reports .
NEW QUESTION # 71
Who is responsible for ensuring internal auditors continuing professional development*
- A. The board
- B. Engagement supervisors
- C. Chief audit executive.
- D. Individual internal auditors
Answer: D
Explanation:
* Introduction:
* Continuing Professional Development (CPD) is essential for internal auditors to maintain and enhance their skills and knowledge.
* Responsibility for CPD:
* While the organization and CAE provide support and resources, the primary responsibility for ensuring CPD rests with the individual internal auditors.
* Options Analysis:
* Option A: Individual internal auditors are responsible for their own CPD.
* Option B: The CAE facilitates opportunities for CPD but is not solely responsible.
* Option C: The board oversees overall governance and strategy but not individual CPD.
* Option D: Engagement supervisors support auditors in their roles but do not manage their CPD.
* Conclusion:
* Individual internal auditors are responsible for ensuring their own continuing professional development.
NEW QUESTION # 72
According to IIA guidance, which of the following best describes the purpose of a planning memorandum for an audit engagement?
- A. It documents the audit steps and procedures to be performed.
- B. it documents preliminary information useful to the audit team.
- C. It documents events that could hinder the achievement of process objectives.
- D. It documents existing measures that manage risks in the area under review
Answer: A
Explanation:
The planning memorandum serves as a comprehensive blueprint for an audit engagement, outlining the specific steps, procedures, and strategies that will be employed to carry out the audit. According to IIA guidance, the purpose of this document is to ensure that the audit team is well-prepared and that the audit process is systematic and thorough.
Documentation of Audit Steps and Procedures: The primary purpose of a planning memorandum is to detail the steps and procedures that the audit team will follow. This ensures consistency and clarity throughout the audit process and provides a clear framework for team members to follow.
Preparation and Coordination: It serves as a preparatory document that helps in coordinating the activities of the audit team, ensuring that everyone is aware of their roles and responsibilities.
Practical Example: If an audit is being conducted on the financial reporting processes, the planning memorandum would include specific procedures for testing internal controls over financial reporting, timelines for each phase of the audit, and responsibilities assigned to each team member.
Risk Management: While it includes information on preliminary risks, its main focus is on documenting the audit steps rather than managing risks or existing measures, which would be covered in other documents or sections of the audit plan.
NEW QUESTION # 73
Which of the following is most likely to impair the organizational independence of the internal audit activity?
- A. The CAE reports functionally to the CEO.
- B. The CAE managed the finance department for the past five years.
- C. The CAE oversees the effectiveness of the organization's risk management function.
- D. The chief audit executive (CAE) reports administratively to the chief financial officer
Answer: B
Explanation:
Impairment of Independence: The organizational independence of the internal audit activity can be impaired if the CAE has had significant roles in management, such as managing the finance department. This prior involvement may create a conflict of interest or perceived bias.
IIA Standards on Independence: The IIA emphasizes the importance of independence and objectivity in internal auditing. Any prior management role, especially in the department being audited, can compromise the CAE's objectivity.
NEW QUESTION # 74
If the skills and competencies are not present within the internal audit activity to complete an ad-hoc assurance engagement, which of the following is an acceptable resolution?
- A. Complete the engagement as requested, with the best of the current staff's abilities.
- B. Politely decline the engagement due to a lack of qualified staff available at the time.
- C. Change the scope of the testing to ensure that only available staff proficiencies are used
- D. Consider using employees from other departments in the organization on the audit team.
Answer: D
Explanation:
* Introduction:
* When the internal audit team lacks necessary skills for an ad-hoc assurance engagement, leveraging internal resources can be a practical solution.
* Resolving Skill Gaps:
* Using employees from other departments can provide the needed expertise while maintaining the engagement's integrity.
* Options Analysis:
* Option A: Declining the engagement may not be feasible and does not address the need.
* Option B: Completing the engagement without the required skills can compromise quality.
* Option C: Using employees from other departments brings in the necessary competencies and supports cross-functional collaboration.
* Option D: Changing the scope may limit the effectiveness of the engagement.
* Conclusion:
* The acceptable resolution is to consider using employees from other departments in the organization to bring in the required skills for the engagement.
NEW QUESTION # 75
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