IIA Updated IIA-CIA-Part1 Exam Questions and Answers by luna-rose

Incentive-based compensation structures can increase risks to the organization’s control environment by potentially motivating undesirable behaviors such as taking undue risks or manipulating results to meet targets that trigger compensation rewards. This can undermine the integrity of controls and reporting within the organization.

Governance and risk management literature, including studies and guidance on compensation structures and their impact on organizational behavior and risk.

According to the Institute of Internal Auditors (IIA), the internal audit activity can play several roles in risk management, but its involvement should be advisory and facilitative in nature. The most appropriate role from the given options for the internal audit activity in an organization ' s risk management process is championing the establishment of a risk management framework. This includes advocating for risk management throughout the organization and helping management establish and improve the risk management framework without taking on management responsibilities, such as setting risk appetite or maintaining sole responsibility for risk management.

IIA Position Paper: " The Role of Internal Auditing in Enterprise-wide Risk Management "

According to the IIA Standards, the chief audit executive (CAE) must ensure that internal audit activities are performed with competence and due professional care. If the internal audit team lacks the necessary knowledge or skills to perform all or part of the work, the CAE must obtain competent advice and assistance. Thus, the CAE ' s best response to defend the expenditure for an external fraud expert is to refer to the Standards, explaining that the internal audit activity must obtain competent assistance if needed to ensure the investigation is conducted effectively and professionally.

IIA Standard 1210: Proficiency

An appropriate disclosure of potential nonconformance with the Standards would be that an external assessment of the internal audit activity was last performed six years ago. According to IIA standards, external assessments must be conducted at least once every five years. Failing to perform an external assessment within this timeframe constitutes nonconformance with the Standards.

IIA Standard 1312 - External Assessments, which requires that external quality assessments be performed at least once every five years to ensure conformity with the Standards.