Guideline for attempting the CIA Part 1 exam confidently!

Guideline for attempting the CIA Part 1 exam confidently:

Pre-Exam Preparation

Before starting the exam, make sure you:

1. *Read the instructions carefully*: Understand the exam format, time limit, and any specific instructions.

2. *Plan your time*: Allocate time for each section and question based on their complexity and your familiarity with the topic.

3. *Stay calm and focused*: Take deep breaths, and try to relax.

First Hour Strategy (40+ MCQ)

During the first hour, focus on attempting simple and understandable questions first:

1. *Quickly scan the questions*: Identify questions that are straightforward and easy to understand.

2. *Attempt 40+ MCQ*: Focus on completing at least 40 simple questions within the first hour.

3. *Use the process of elimination*: Eliminate obviously incorrect options to increase your chances of selecting the correct answer.

4. *Mark questions for review*: If you're unsure about a question, mark it for review and come back to it later.

Second and Third Hour(starting )Strategy

After completing the simple questions, move on to more complex questions:

1. *Tackle moderate-level questions*: Attempt questions that require more analysis and critical thinking.

2. *Use your knowledge and experience*: Apply your knowledge of internal auditing concepts, standards, and best practices to answer questions.

3. *Manage your time effectively*: Allocate time for each question based on its complexity and your familiarity with the topic.

Final 30 Minutes Strategy

During the final 30 minutes, focus on:

1. *Reviewing marked questions*: Go back to questions you marked for review and attempt to answer them.

2. *Checking your work*: Review your answers to ensure you've selected the correct option.

3. *Making educated guesses*: If you're unsure about a question, make an educated guess based on your knowledge and experience.

Additional Tips

1. *Stay focused and calm*: Take breaks if needed, and try to relax.

2. *Use the exam software effectively*: Familiarize yourself with the exam software and use its features to your advantage.

3. *Don't get stuck on a question*: Move on to the next question if you're unsure or stuck.

By following these guidelines and strategies, you'll be well-prepared to tackle the CIA Part 1 exam and achieve a high score.

Students... feel free 🆓 to discuss with me.. share your views, suggestion, queries here ✍️ in comment box.. Sure i will guide you respond you within shortest possible time.

Best wishes 🍀 

Prof Mahaley

Head Gmsisuccess Mumbai Tel 9773464206

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MCQ questions ⁉️ on Independence of the Internal Audit Activity

 Solve this 15 MCQ mocktest,submit your answers

Independence of the Internal Audit Activity:

1- Independence permits internal auditors to render impartial and unbiased judgments. The best way to achieve independence is through

A. Supervision within the organization.

B. Organizational knowledge and skills.

C. Individual knowledge and skills.

D. A dual-reporting relationship.

 

2- Which of the following facts, by themselves, could contribute to a lack of independence of the internal

audit activity?

1. The CEO accused the new auditor of not operating “in the best interests of the

organization.”

2. The majority of audit committee members come from within the organization.

3. The internal audit activity’s charter has not been approved by the board.

A. 1 only.

B. 2 and 3 only.

C. 2 only.

D. 1, 2, and 3

 

3- Which action is not consistent with functional reporting?

A. The board should have the final authority to approve the internal audit risk assessment.

B. The board should approve the CAE’s performance evaluation.

C. Organizational independence is effectively achieved when the CAE reports functionally to the

board.

D. The CAE should meet with the board, with management present, to reinforce the independence

of the internal audit activity.

 

4- According to the International Professional Practices Framework, the independence of the internal

audit activity is achieved through

A. Staffing and supervision.

B. Organizational status and objectivity.

C. Continuing professional development and due professional care.

D. Human relations and communications.

 

5- The board is most likely to participate in approving

A. Staff promotions and salary increases.

B. Engagement communication observations, conclusions, and recommendations.

C. Appointment of the chief audit executive.

D. Engagement work programs.

 

6- The organizational level to which the internal audit activity reports

A. Requires only the board’s annual approval of the engagement work schedule, staffing plan, and

financial budget.

B. Is best when reporting is only made to the board of directors.

C. Must be sufficient to permit the accomplishment of the activity’s responsibilities.

D. Is guaranteed when the charter specifically defines the activity’s independence.

 

7- An external quality assessment team was evaluating the independence of an internal audit activity.

The internal audit activity performs engagements concerning all of the elements included in its scope.

Which of the following reporting responsibilities is most likely to threaten the internal audit activity’s

independence? Reporting to the

A. President.

B. Chief financial officer.

C. Executive vice president.

D. Audit committee.

8- In some cultures, and organizations, managers insist that an internal audit activity is not needed to

provide a critical assessment of the organization’s operations. This kind of management attitude will

most probably have an adverse effect on the internal audit activity’s

A. Operating budget variance.

B. Effectiveness.

C. Performance appraisals.

D. Policies and procedures.

 

9- The reporting structure that is most likely to allow the internal audit activity to accomplish its

responsibilities is to report administratively to the

A. Chief executive officer and functionally to the board of directors.

B. Board and functionally to the chief executive officer.

C. Chief executive officer and functionally to the external auditor.

D. Controller and functionally to the chief financial officer.

 

10- When evaluating the independence of an internal audit activity, a quality assurance review team

performing an external assessment considers several factors. Which of the following factors has

the least amount of influence when judging an internal audit activity’s independence?

A. Relationship between engagement records and engagement communications.

B. The extent of internal auditor training in communications skills.

C. Impartial and unbiased judgments.

D. Criteria used in making internal auditors’ assignments.

 

11- Which of the following describes the chief audit executive’s optimal reporting line to enhance the

independence of the internal audit activity?

A. Administrative reporting to the chief financial officer.

B. Administrative reporting to the board.

C. Functional and administrative reporting to the president of the organization.

D. Functional reporting to the audit committee.

 

12- A charter is being drafted for a newly formed internal audit activity. Which of the following best

describes an appropriate organizational position to be incorporated into the charter?

A. The chief audit executive is a member of the board.

B. The chief audit executive is a staff officer reporting to the chief financial officer.

C. The chief audit executive reports to an administrative vice president.

D. The chief audit executive reports to the chief executive officer but has access to the board.

 

13- A formal document (charter) approved by the board that defines the internal audit activity’s

purpose, authority, and responsibility enhances its

A. Proficiency.

B. Independence.

C. Relationship with management.

D. Exercise of due professional care.

 

14- To avoid being the apparent cause of conflict between an organization’s senior management

and the board, the chief audit executive should

A. Strengthen the independence of the internal audit activity through organizational position.

B. Discuss all reports to senior management with the board first.

C. Communicate all engagement results to both senior management and the board.

D. Request board approval of policies that include internal audit activity relationships with the

board.

15- An organization is in the process of establishing its new internal audit activity. The controller has

no previous experience with internal auditors. Due to this lack of experience, the controller advised

the applicants that the CAE will be reporting to the external auditors. However, the new chief audit

executive will have free access to the controller to report anything important. The controller will then

convey the CAE’s concerns to the board of directors. The internal audit activity will

A. Not be independent because the organization did not specify that the applicants must be certified

internal auditors.

B. Not be independent because the CAE reports to the external auditors.

C. Be independent because the CAE has direct access to the board.

D. Not be independent because the controller has no experience with internal auditors.

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Where is Internal Audit, into an increasingly technology-driven, innovation-oriented, risky, and disruptive future!

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The world is entering the fourth industrial revolution and new technologies, digitalization, and artificial intelligence are dramatically changing the business landscape.

That means organisations are hurtling into an increasingly technology-driven, innovation-oriented, risky, and disruptive future. The question is now where is the internal audit? The answer is that, most of the time and despite ongoing efforts to meet stakeholders’ growing list of needs, it’s playing catch-up.

Until recently, the Internal Audit profession has not faced the need to innovate. Internal Audit 1.0 was born with the founding of the Institute of Internal Auditors (IIA) in 1941 while the Sarbanes Oxley Act of 2002 brought Internal Audit 2.0. Along the way, such developments as the COSO framework, improved capabilities such as IT internal audit and data analytics, and supplementary guidance have improved the profession following the global financial crisis.

However, as we approach the end of a decade of unsettling uncertainty, organisations face evolving strategic, reputational, operational, financial, regulatory, and cyber risks. There is also an urgent need for Internal Audit to innovate to the next level.

Internal Audit 3.0 is the next generation of Internal Audit, and is a function attuned to the challenges of emerging risks, technologies, innovation, and disruption as the organisation itself. Internal Audit must be a function fully able to assist in safeguarding processes and assets as management pursues new methods of creating and delivering value.

Based on Deloitte external quality assessments (EQAs) conducted for Internal Audit functions in a range of industries, in interviews with senior executives and audit committee chairs, and in numerous Deloitte research surveys with chief audit executives and heads of Internal Audit, the following constitute the triad of value that Internal Audit stakeholders now want and need.

• Assurance constitutes and remains the core role of Internal Audit. Yet the range of activities, issues, and risks to be assured should be far broader and more real-time than they have been in the past. Assurance on core processes and the truly greatest risks is essential but so is assurance around decision governance, the appropriateness of behaviors within the organisation, the effectiveness of the three lines of defense (LoD), and oversights of digital technologies. Assurance is central to Internal Audit’s role but must not be the limit.

• Advising management on control effectiveness, change initiatives, enhancements to risk management related to the three Lines of Defence and other matters – including business effectiveness and efficiency – falls well within Internal Audit’s role and stakeholders’ expectations. All sources confirm that a strong advisory role is key to maximising the value of Internal Audit.

• Anticipating risks and assisting the business in understanding risks, and in crafting preventative responses, transforms Internal Audit from being a predominantly backward-looking function that reports on what went wrong to a forward-looking function that prompts awareness of what could go wrong, and what to do about it, before it happens. Internal Audit becomes more proactive and, through its assurance and advisory roles, helps management intervene before risks materialise.

As the saying goes, “There are those who make things happen, those who watch things happen, and those who ask, ‘What happened?’” The stakes are too high, for both Internal Audit and the organisation, for Internal Audit to be in the latter group. Stakeholder needs have become clear enough for Internal Audit to engage in true transformation. With a vision – collaboratively developed, clearly articulated, and strongly supported – functions can upgrade to Internal Audit 3.0 providing stakeholders with its true worth. The future of Internal Audit has become clear, and the time to upgrade is now.

These key sources of opinion have clearly said that:
Assurance constitutes and remains the core role of
Internal Audit. Yet the range of activities, issues, and
risks to be assured should be far broader and more
real-time than they have been in the past. Assurance on
core processes and the truly greatest risks is essential
but so is assurance around decision governance, the
appropriateness of behaviors within the organization,
the effectiveness of the three lines of defense (LoD), and
oversight of digital technologies. Assurance is central to
Internal Audit’s role but must not be the limit.

Advising management on control effectiveness,
change initiatives, enhancements to risk management
related to the three LoD and other matters – including
business effectiveness and efficiency – falls well within
Internal Audit’s role and stakeholders’ expectations.
All sources confirm that a strong advisory role is key to
maximizing the value of Internal Audit.
Anticipating risks and assisting the business in
understanding risks, and in crafting preventative
responses, transforms Internal Audit from being a
predominantly backward-looking function that reports
on what went wrong to a forward-looking function
that prompts awareness of what could go wrong, and
what to do about it, before it happens. Internal Audit
becomes more proactive and, through its assurance and
advisory roles, helps management intervene before risks
materialize.

Internal Audit planning aims to balance assurance
around two features – core processes and the truly
greatest risks to the organization. Internal auditors can
cover only so many processes per year and often default
to performing audits on a rotational basis in order to
find time to also provide assurance around the greatest
risks. Yet stakeholders need both types of assurance
– assurance that core financial and operational
processes in areas like procurement, payables, payroll,
and health and safety are working properly, and
confidence that the organization’s truly greatest risks
(e.g. cyber, digitalization, change management, etc.) are
appropriately managed – on a more continual basis.
Now, what if – using digital assets – core assurance
could be automated, significantly reducing the
resources needed to cover these traditional, core
processes on a more continual basis? Automated
core assurance harnesses analytics, robotic process
automation (RPA), and artificial intelligence (AI) to
monitor controls and flag non-conformance in real
time. Combine this with automated reporting, and
Internal Audit can communicate non-conformance to
the business so they can remediate immediately, rather
than only being able to check the controls every few
years under a rotational audit plan scenario.

Assure
The core – but not the limit – of Internal Audit:

Advise
Maximizing value to stakeholders:

Anticipate
Delivering forward-looking insights:

Courtesy:

deloitte:gx-internal-audit-3.0-the-future-of-internal-audit-is-now

AUDITING AN ORGANIZATION’S GOVERNANCE AND ETHICS

Auditing an organization’s governance and ethics:

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We have no universally accepted definition of the word “governance.” The Institute of Internal Auditors (IIA) defines corporate governance as “the combination of processes and structures implemented by the board to inform, direct, manage, and monitor the activities of the organization toward the achievement of its objectives.” While many organizations throughout the world follow this definition, others apply it differently.  For instance, the Geneva Court of Accounts (Cour des comptes, Geneva Switzerland) follows the IIA’s interpretation of governance, but a chief audit executive (CAE) might use a different application for audit purposes when the organization has adopted a different framework or model.

According to the ACFE’s Fraud Examiners Manual, corporate governance is broadly used to describe the oversight responsibilities of different parties for an organization’s direction, operations and performance.

More specifically, the Organisation for Economic Co-operation and Development (OECD) defines corporate governance as: “[The] procedures and processes according to which an organisation is directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among the different participants in the organization — such as the board, managers, shareholders and other stakeholders—and lays down the rules and procedures for decision-making. (See the OECD’s Glossary of Statistical Terms, July 2005.)

Even though definitions vary, it’s widely accepted that an organization’s ethics is an important part of its governance.

A detailed description of what constitutes the “ethical dimension” in an organization’s governance is beyond the scope of this article. Put simply, the ethical dimension can be defined as an organization’s code of conduct and acceptable employee behavior.

An internal auditor usually analyzes an organization’s ethics when it has an important impact on other key governance aspects, such as risk management, compliance, strategy and how it conducts its business. Strong ethics helps an organization perform better.

Here are some practical difficulties that auditors might face when auditing an organization’s governance (not an exhaustive list):

Code of silence

During an audit of an organization’s governance, executives and employees might be tempted to describe the ethical climate as ideal. And the organization’s documentation often corroborates the interviews. However, this ideal picture doesn’t always correspond with the real situation. Much unethical behavior doesn’t necessarily leave any paper trail! For example, the Cour des comptes’ 2015 and 2016 audits determined that certain employees omitted important elements during the interviews.

The audit showed employees were performing personal tasks during office hours or using company resources outside the office. These included plumbing work and a gate repair at executives’ homes, selling personal items during office hours and intervening in a bid to favor one company over another.

Proper training

Verifying the accuracy of the received information is a paramount task. Often, the only way to do this is by cross-checking the information and detecting the discrepancies during the interviews. Auditors should be very careful when conducting interviews. Applying proper interviewing techniques like those taught by the ACFE helps to identify deceitful statements about the ethical climate.

The common PEACE interviewing method focuses on information gathering instead of obtaining a confession: planning and preparation, engage and explain, account, closure and evaluation.

Auditors who conduct interviews also should be proficient notetakers. They sometimes must handwrite an interview’s proceedings that the interviewee will sign at the end of the interview. This can be particularly helpful when executives or employees are being deceitful or fear retaliation from management. The prospect of signed handwritten interview notes can impede employees from willfully lying about facts that the interviewer has established or confirmed during the interview.

External pressures

Even though it’s rare, an organization’s executives or employees might try to exert pressure on the auditors conducting the interviews. For example, during the Cour des comptes audit mentioned earlier, an employee said, “One word from this person and your audit will be shut down immediately!” (Of course this didn’t happen.)

Auditors might feel even more pressure when they encounter unethical behaviors that don’t constitute criminal offenses.

Self-censorship

Auditors also might place undue pressure on themselves. They might fear for their future professional careers, so they’ll attempt to please their organizations. An organization’s management must support its auditors and create an environment that promotes strong ethical values for them.

Organizations must understand that auditors don’t necessarily have the proper training to audit governance and ethics, or they simply have no desire to obtain it. Organizations also must realize certain auditors simply don’t wish to be enmeshed in potential conflicts.

The atmosphere during an ethics examination can be heavy, especially if the ethical dimension isn’t adequate. Some executives and employees might be hostile against the ongoing audit. Others might have a hard time accepting the unethical climate on a personal level and break down during interviews (in several interviews I’ve conducted, executives and employees started crying during the interview).

Sometimes, the governing body fails to promote ethical values and might wish to minimize the facts. So the auditor might be tempted to also minimize the findings, such as treating each occurrence as a separate, non-related event rather than knitting them together into a whole picture.

Possible solutions

Here are some ways to conduct successful governance and ethics audits:

• Carefully select the auditors who’ll participate and devise the order in which they’ll interview the employees. (It might be necessary for them to interview the same employee several times.) Include top-level executives as well as regular employees. The interviews’ order might change during the audit depending on the findings. Evaluate what the auditors learned through their interviews and analysis and adjust the auditing strategy accordingly.
• Create a setting in which the organization‘s executives and employees feel free to talk. Show the interviewees that the interviews will remain confidential and they don’t need to fear retaliation. Sometimes you ease their by conducting the interviews outside their offices in a less threatening environment. (See Creating a climate of trust: Effective interviewing during audits can lead to tips, by Nikola Blagojevic, CFE, October 2015, Fraud-Magazine.com.)
• Create an internal setting in which the auditors feel free to report any pressures and can discuss moral dilemmas that might arise during the audit.
• When possible, interview those — such as suppliers and consultants — who don’t work directly at the organization but have dealings with it.
• Record the minutes during interviews so interviewees can easily read and sign them immediately following the interviews.

Auditing governance goes beyond analyzing risk management and the strategical objectives of the entity. It requires understanding ethics to diminish the audit risk to an acceptable level.

Courtesy:

Nikola Blagojevic, Msc, CFE, CISA, is an audit director at the Cour des Comptes in Geneva, Switzerland. His email address is: nikola.blagojevic@cdc.ge.ch.