IIA IIA-CIA-Part1 Practice Test - Questions Answers, Page 72

Due professional care is the care and skill expected of a reasonably prudent and competent internal auditor2.It requires internal auditors to follow the International Professional Practices Framework (IPPF) issued by the Institute of Internal Auditors (IIA), which includes the Code of Ethics and the Standards3.One of the aspects of due professional care is to perform risk-based audits, which means identifying and assessing the risks that may affect the organization's objectives, and designing and executing audit procedures that provide reasonable assurance on the effectiveness of risk management and internal control4. Therefore, option B is an appropriate statement to include in the report to demonstrate how the internal audit activity meets its requirement for due professional care.

1: Standard 1220 -- Due Professional Care2: Due professional care definition3: What is due professional care in internal audit?4: Standard 1220 -- Due Professional Care - The Institute of Internal Auditors or The IIA

According to the IIA's Code of Ethics, internal auditors are responsible for maintaining their knowledge, skills, and other competencies at a level required to perform their professional responsibilities2.Internal auditors should also pursue relevant professional development opportunities to enhance their ability to add value to the organization3. Therefore, option C is the correct answer.

The other options are not correct.The officer in charge of human resources, the chief audit executive, and the CEO may support or facilitate the internal auditor's professional development, but they are not ultimately responsible for it4.The internal auditor has the primary accountability and obligation to maintain and improve their own competencies5.

Risk appetite is the amount and type of risk that an organization is willing to accept in pursuit of its objectives2.It reflects the organization's risk culture and strategy, and guides the risk assessment, response, and reporting processes3.In this case, the decision to invest in a stock that could have a high expected return rate without taking any risk mitigation activities illustrates a high risk appetite, as the organization is willing to accept a high level of uncertainty and volatility for a potential reward4.

1: Risk Resources in Internal Audit | The IIA2: Risk-based internal audit - Wikipedia3: What is Risk Management in Internal Audit - ESG | The Report4: Internal Audit 1 January 13, 2012 - vsu.edu

The Mission of Internal Audit is to enhance and protect organizational value by providing risk-based and objective assurance, advice, and insight2.One of the activities that the internal audit activity performs to fulfill this mission is to conduct reviews of internal risk and controls, which means evaluating and improving the effectiveness of risk management, control, and governance processes in the organization3. This helps the organization to achieve its objectives and mitigate its risks.

1: CIA Exam Practice Questions - Certified Internal Auditor 20192: Mission of Internal Audit3: About Internal Audit : What is Risk Management in Internal Audit - ESG | The Report

A business continuity plan (BCP) is a preventive control that aims to ensure the continuity of critical business functions and processes in the event of a disruption or disaster2.A BCP identifies the potential risks and impacts that could affect the organization, and outlines the strategies and actions to mitigate them and resume normal operations as soon as possible3.A BCP can help organizations to reduce the financial losses and reputational damages caused by business interruptions, and enhance their resilience and preparedness4.

1: Business continuity: Managing disaster and disruption22: Preventive controls53: 25 Key Financial Controls for Small Businesses34: 5 Steps To Protect Your Business From Supply Chain Disruptions4

The organization aspect of an internal audit charter relates to the reporting structure for the internal audit activity.It establishes the position of the internal audit activity within the organization, and defines its functional and administrative reporting lines2.The organization aspect also ensures that the internal audit activity has sufficient independence and authority to perform its work effectively and objectively3.

1: Internal Audit Charter [A Complete Guide + Template] - ModelOrganization22: The Internal Audit Charter IIA POSITION PAPER The Internal Audit Charter Blueprint to Assurance Success Introduction One of the great challenges every organization faces is assuring efficient and effective risk management those policies and processes designed to leverage or mitigate risks to the organization's advantage. When done well, internal audit provides that assurance as part of its role to protect and enhance organizational value. For internal audit to operate at the highest levels, it must have clearly defined and articulated marching orders from the governing body and management. This is most easily achieved with a well-designed internal audit charter. The IIA's Perspective Every organization can benefit from internal audit, and an internal audit charter is vital to success of the activity (IIA Standard 1000). The charter is a formal document approved by the governing body and/or audit committee (governing body) and agreed to by management. It must define, at minimum: Internal audit's purpose within the organization. Internal audit's authority. Internal audit's responsibility. Internal audit's position within the organization. The IIA has produced model charters available to IIA members here in eight languages. Why the Internal Audit Charter Is Important The charter provides the organization a blueprint for how internal audit will operate and helps the governing body to clearly signal the value it places on internal audit's independence. Ideally it establishes reporting lines for the chief audit executive (CAE) that support that independence by reporting functionally to the governing body (or those charged with governance) and administratively to executive management. It also provides the activity the needed authority to achieve its tasks, e.g., unfettered access to records, personnel, and physical properties relevant to performing its work. KEY TAKEAWAYS The internal audit charter is vital to internal audit's success and should be reviewed annually by the governing body. The internal audit charter should be approved by the governing body and agreed to by senior management. The charter should at a minimum include internal audit's purpose and mission, authority, responsibility, its independent reporting relationships, scope and requirement to conform to IIA Standards.The internal audit charter should include details of how the internal audit activity will assess and report on the quality of the internal audit activity.13: Charter | Internal Audit4

This phrase from the interviewee is most likely to raise concerns regarding potential control deficiencies or fraud risks, because it indicates a lack of segregation of duties and proper backup arrangements in the purchasing process2.Segregation of duties is a key internal control that prevents or detects errors or fraud by ensuring that no single person has complete control over a transaction or activity3.Proper backup arrangements are also important to ensure that the purchasing process can continue smoothly and effectively in the absence of the department manager4.If the department manager cannot take more than a few days of vacation, it may suggest that he or she is trying to conceal some irregularities or misconduct in the purchasing process, or that there is no adequate supervision or review of his or her work5.

1: Internal Audit Interview Questions & Answers - Wisdom Jobs2: Segregation of Duties: A Key Internal Control - The CPA Journal3: Segregation of Duties - The Institute of Internal Auditors or The IIA4: Backup Arrangements - The Institute of Internal Auditors or The IIA5: Fraud Prevention Checklist - The Institute of Internal Auditors or The IIA

The internal audit activity must be independent, and internal auditors must be objective in performing their work2.This means that they should not have any conflicts of interest or undue influence that could impair their judgment or credibility3.Therefore, the CAE should not assume any management responsibilities or roles that could compromise their independence or objectivity, such as the chief compliance officer4.Option B is the most appropriate alternative, as it preserves the separation of duties and accountability between the internal audit and compliance functions, while allowing the CAE to provide some guidance and oversight to the new chief compliance officer5.

The other options are not appropriate, as they would create potential impairments to the internal audit activity's independence or objectivity. Option A would create a self-review threat, as the CAE would have to audit their own work in the compliance function. Option C would create a familiarity threat, as the CAE would have a close relationship with the external auditor who would audit their work in the compliance function. Option D would create a role conflict, as the CAE would have to balance the conflicting objectives and expectations of the internal audit and compliance functions.

A risk management framework is a system for identifying, evaluating and prioritising risks and minimising their impact.The primary goal of a risk management framework is to preserve a company's capital and earnings while allowing it to develop2.There is no one-size-fits-all approach to risk management, as different organizations face different types and levels of risks depending on their industry, size, culture, objectives, and strategies3. Therefore, the organization should ensure that its risk management framework is tailored to its specific needs and circumstances, and reflects its risk appetite and tolerance.

1: Risk Management Framework (RMF) Definition - Investopedia2: A Guide to the Risk Management Framework (With Examples)3: What Is A Risk Management Framework (RMF)? 2023 Guide - SelectHub : Risk Resources in Internal Audit | The IIA