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

An The top-down approach to understanding business processes is conducted from a broad organizational perspective, beginning with the overall objectives and strategic goals of the organization and then drilling down into the specific processes that support these goals. While this approach ensures alignment with the organization's objectives, it has the greatest risk of overlooking critical processes at the lower levels, especially those that might be operationally significant but not directly linked to top-level objectives.

IIA References:

IIA Standard 2010: Planning suggests that internal auditors should understand the organization’s business processes in relation to its objectives. The top-down approach aligns with this but can risk missing important operational details that might be captured through a more granular (e.g., bottom-up) approach.

The IIA Standards emphasize that the chief audit executive (CAE) should develop the internal audit plan based on a thorough assessment of risks facing the organization. This risk-based approach ensures that the most significant and relevant areas are prioritized. While input from senior management and regulatory requirements are also important, the primary driver should be the most recent and comprehensive risk assessment. References:

IIA Standards - 2010: Planning

IIA Practice Guide - Developing the Risk-based Internal Audit Plan

Entity-level controls provide the foundation for effective process controls. If these controls are poorly designed, they can undermine the effectiveness of process-level controls (COSO Framework, 2013). Internal auditors assess entity-level controls during risk assessments, as emphasized in CIA Part 2 (Section II). Option A is incorrect as auditors prioritize high-risk controls rather than all controls. Options C and D contradict best practices in engagement planning (Standard 2200), which encourage transparency and comprehensive evaluation of key risks.

According to IIA guidance, the focus of a review of controls to prevent fraud should be on the effectiveness rather than the efficiency of the controls. Effectiveness pertains to whether the controls adequately mitigate fraud risks and prevent fraudulent activities, while efficiency focuses on the performance and cost-effectiveness of the controls, which is not the primary concern in preventing fraud. This makes statement A false in the context of IIA guidance.

References:

IIA Standards: 1220.A1 - Due Professional Care

IIA Practice Guide: Fraud Prevention and Detection in an Automated World