IIA Updated IIA-CIA-Part2 Exam Questions and Answers by yara

Introduction:

The role of the internal audit activity within a risk and control framework is to provide independent assurance that management has established and is maintaining effective internal controls.

Responsibilities of Internal Audit:

Internal auditors evaluate and monitor the effectiveness of internal controls, ensuring they are designed and operating effectively to mitigate risks and achieve organizational objectives.

Options Analysis:

Option A: Internal audit does not constitute the first line of defense; this role is typically held by management.

Option B: While internal audit may provide recommendations, it does not direct the implementation of internal controls.

Option C: Verifying that management has met its responsibility for implementing effective controls aligns with the assurance role of internal audit.

Option D: Implementing the internal control framework is a management responsibility, not internal audit's.

Conclusion:

The best description of internal audit’s responsibility within a risk and control framework is to verify that management has met its responsibility for implementing effective controls.

Internal Audit Standards and Practice Guides .

A. Vouching vendor invoices to payments made:This verifies payment accuracy but does not confirm whether purchases were authorized.

B. Sorting invoices by purchase orders and comparing for successive duplicate invoices:This approach focuses on detecting duplicate invoices, not authorization.

C. Comparing a random sample of vendor invoices to purchase orders:Correct. This method directly matches invoices to purchase orders, confirming that purchases were authorized and appropriately documented.

D. Sorting payments by invoice to detect successive duplicate invoices:Similar to option B, this approach focuses on detecting duplicates rather than verifying authorization.

CIA Exam Syllabus Reference:

Domain V: Performing Internal Audit Services – Testing for Authorization and Validity.

According to IIA guidance, the chief audit executive (CAE) is responsible for establishing policies and procedures for the internal audit activity, including the retention of audit records. These requirements should be aligned with the organization’s overall processes and procedures to ensure consistency and compliance with legal and regulatory requirements. This approach ensures that the retention policy is tailored to the specific needs and context of the organization, while also maintaining alignment with broader organizational policies.

The Institute of Internal Auditors (IIA) - Standards for the Professional Practice of Internal Auditing, Standard 2330 - Documenting Information

The Institute of Internal Auditors (IIA) - Practice Advisory 2330-1: Document Retention

According to the IIA guidance, reviewing and approving payroll timesheets by the timekeeper before processing is considered least effective in managing the risk of payroll fraud. While this procedure might detect some errors or irregularities, it does not provide a robust control against fraud because the timekeeper can collude with employees or fail to review timesheets adequately. On the other hand, procedures such as comparing payroll lists to personnel records, deactivating payroll database access upon termination, and validating changes to payroll by the personnel department involve checks and balances that are more effective at preventing or detecting fraudulent activities.

IIA Practice Guide: Managing the Business Risk of Fraud: A Practical Guide

IIA Standards and Guidance: IPPF – Practice Guide