CIA part 1.Ethics & Professionalism
CIA PART 1 - 2025 SYLLABUS
DOMAIN I: ETHICS AND PROFESSIONALISM
Weight: 15% | Based on IIA Code of Ethics + Standards
PART 1: VERY IMPORTANT POINTS
*1. IIA CODE OF ETHICS - 4 PRINCIPLES*
- *INTEGRITY*
- Be honest, diligent, responsible
- Observe law and make disclosures required by law
- *Example*: Refuse to alter audit findings under management pressure
- *OBJECTIVITY*
- Unbiased mental attitude
- Disclose all material facts known that could distort reporting
- Avoid conflicts of interest
- *Example*: Recuse from audit where spouse is manager
- *CONFIDENTIALITY*
- Protect information
- Don't use for personal gain or in unlawful manner
- *Example*: Don't share draft audit report with outsiders
- *COMPETENCY*
- Apply knowledge, skills, and due professional care
- Only perform services you are qualified for
- *Example*: Take CPE before auditing new ERP system
#### *2. 4 RULES OF CONDUCT*
- *Integrity*: Don't knowingly be part of illegal activity
- *Objectivity*: Don't accept anything that impairs judgment
- *Confidentiality*: Safeguard information
- *Competency*: Perform only with adequate knowledge/skills
#### *3. KEY TERMS & DEFINITIONS*
- *Due Professional Care*: Care an ordinarily prudent auditor would exercise. Includes planning, supervision, documentation
- *Impairment*: Anything interfering with independence/objectivity. Ex: budget cuts, prior responsibility, relationships
- *Independence*: Organizational status. Freedom from interference. CAE reports functionally to Board/Audit Committee
- *Objectivity*: Individual mindset. Unbiased judgment
- *Conflict of Interest*: Personal interest vs duty to organization
- *Professional Skepticism*: Questioning mindset. Corroborate evidence
- *Whistleblowing*: Reporting wrongdoing to proper authorities
- *Governance*: Processes by Board/Mgmt to ensure objectives are met
#### *4. INDEPENDENCE vs OBJECTIVITY*
- *Independence*: Structural. Set by charter and reporting line
- *Objectivity*: Individual. Mental attitude
- *Both required* for effective internal audit
#### *5. ETHICAL CONFLICT RESOLUTION STEPS*
1. Discuss with immediate supervisor
2. If unresolved → Higher level of management
3. If still unresolved → CAE
4. If illegal → Consider legal counsel/regulatory authorities
- *Note*: Never go to external parties/media first
#### *6. RESPONSIBILITIES*
- *CAE*: Establish Code, communicate it, monitor compliance
- *Board*: Approve IA Charter, ensure independence
- *Auditor*: Comply with Code, disclose impairments
#### *7. COMMON THREATS TO OBJECTIVITY*
- *Self-review threat*: Auditing your own prior work
- *Familiarity threat*: Too close to auditee
- *Advocacy threat*: Promoting auditee's position
- *Financial threat*: Budget pressure, gifts
---
### *PART 2: 40 MCQs WITH ANSWERS - BULLET FORMAT*
#### *SECTION A: CODE OF ETHICS - 12 Qs*
1. *Q*: Which is NOT a principle of IIA Code?
- A. Integrity B. Objectivity C. Accountability D. Confidentiality
- *Ans: C*
2. *Q*: Using audit data to trade stock violates?
- *Ans: C. Confidentiality*
3. *Q*: $200 gift from auditee impairs?
- *Ans: B. Objectivity*
4. *Q*: "Due professional care" is under?
- *Ans: D. Competency*
5. *Q*: T/F: Internal auditors must comply with law
- *Ans: T*
6. *Q*: T/F: Code of Ethics is optional
- *Ans: F*
7. *Q*: T/F: CAE must communicate Code
- *Ans: T*
8. *Q*: T/F: Confidentiality ends after audit
- *Ans: F*
9. *Q*: Best example of Integrity?
- *Ans: B. Reporting fraud despite pressure*
10. *Q*: Competency means?
- *Ans: B. Only perform qualified services*
11. *Q*: Disclosure of impairment required by?
- *Ans: B. Objectivity*
12. *Q*: Using org resources for personal work violates?
- *Ans: A. Integrity*
#### *SECTION B: INDEPENDENCE & OBJECTIVITY - 10 Qs*
13. *Q*: Self-review threat example?
- *Ans: B. Auditing controls you designed last month*
14. *Q*: Best for organizational independence?
- *Ans: B. CAE reports to Audit Committee*
15. *Q*: VP pressures to omit finding. First step?
- *Ans: C. Discuss with immediate supervisor*
16. *Q*: T/F: Budget cuts can impair independence
- *Ans: T*
17. *Q*: T/F: Objectivity not needed for consulting
- *Ans: F*
18. *Q*: T/F: Prior responsibility impairs objectivity
- *Ans: T*
19. *Q*: T/F: Reporting to CEO ensures independence
- *Ans: F*
20. *Q*: T/F: Rotation helps objectivity
- *Ans: T*
21. *Q*: Familiarity threat =
- *Ans: A. Too close to auditee*
22. *Q*: Advocacy threat =
- *Ans: A. Promoting auditee's position*
#### *SECTION C: CONFIDENTIALITY & PROFESSIONALISM - 10 Qs*
23. *Q*: Sharing draft report without permission violates?
- *Ans: C. Confidentiality*
24. *Q*: Professionalism includes?
- *Ans: B. Ethics + Competence + Due care*
25. *Q*: Due professional care means?
- *Ans: B. Care prudent auditor would exercise*
26. *Q*: T/F: Whistleblow to internal authorities first
- *Ans: T*
27. *Q*: T/F: Can disclose info if it helps you
- *Ans: F*
28. *Q*: T/F: Professional skepticism is part of due care
- *Ans: T*
29. *Q*: T/F: Competency means never make mistakes
- *Ans: F*
30. *Q*: T/F: CAE must monitor Code compliance
- *Ans: T*
31. *Q*: Best evidence of professionalism?
- *Ans: B. Adherence to Standards + Code*
32. *Q*: Using audit techniques for side business violates?
- *Ans: C. Confidentiality*
#### *SECTION D: CASE-BASED - 8 Qs*
33. *Q*: CEO committing fraud threatens to fire you. Action?
- *Ans: B. Report to Audit Committee/Board*
34. *Q*: Auditing dept where brother works. Action?
- *Ans: B. Disclose conflict and recuse*
35. *Q*: Due professional care demonstrated by?
- *Ans: B. Proper planning, supervision, documentation*
36. *Q*: Company policy vs IIA Code conflict. Follow?
- *Ans: B. IIA Code*
37. *Q*: CAE fails to establish Code. Violates?
- *Ans: D. CAE responsibility*
38. *Q*: Leaking info to competitor violates?
- *Ans: C. Confidentiality + Integrity*
39. *Q*: "Tone at the Top" relates to?
- *Ans: B. Control Environment*
40. *Q*: Purpose of Code of Ethics?
- *Ans: B. Promote ethical culture in profession*
---
### *PART 3: EXAM CRAM BULLETS*
- *4 Principles*: `I - O - C - C`
- *Escalation Order*: Supervisor → Mgmt → CAE → Legal
- *Reporting Line*: Functionally to Board, Administratively to CEO
- *1-Year Rule*: Can't audit area you managed in last 1 year
- *Most Tested*: Integrity and Objectivity scenarios
- *Key Phrase*: "Reasonable assurance, not absolute"
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