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

A. A plan that focuses on furthering the independence of the internal audit activity:While independence is essential, it is not directly related to professional development planning, which addresses skill enhancement.

B. A plan that ensures internal auditors collectively possess expertise in various fields to avoid outsourcing:This may be a benefit of professional development but is not its primary objective.

C. A plan based on individual preferences and proposals, which helps internal auditors achieve greater success:This option emphasizes individual goals rather than aligning professional development with organizational needs.

D. A plan that focuses on filling gaps in the current skills needed to complete audit objectives:Correct. Professional development should address skill gaps to enhance the internal audit activity’s ability to meet its objectives effectively.

CIA Exam Syllabus Reference:

Domain IV: Managing the Internal Audit Function – Professional Development and Resource Management.

According to IIA guidance, internal auditors should use relevant information obtained during a consulting engagement to inform and enhance their evaluation of internal controls during related audit engagements. This is because the knowledge gained from consulting activities can provide valuable insights into the functioning of controls and processes, which can be applied when assessing their effectiveness in a subsequent audit.

IIA References:

IIA Standard 1220: Due Professional Care indicates that internal auditors should consider all relevant information available to them when making judgments and recommendations. This includes information obtained from consulting engagements.

The IIA’s Practice Guide on Consulting Engagements advises that while internal auditors must maintain objectivity, they can and should use knowledge gained from consulting engagements to enhance the value and accuracy of their assurance work.

According to the Institute of Internal Auditors (IIA) guidance, the chief audit executive (CAE) should develop a risk-based audit plan that takes into account the organization's risk management framework, including its risk appetite levels. This aligns with Standard 2010 – Planning, which states that the CAE must establish a risk-based plan to determine the priorities of the internal audit activity, consistent with the organization’s goals. Risk appetite levels from management are a critical component of understanding the organization’s risk profile and should be incorporated into the audit plan. Thus, the CAE may incorporate risk information, including risk appetite levels from management, at her discretion.

IIA's International Standards for the Professional Practice of Internal Auditing, Standard 2010 – Planning.

Retained earnings represent the cumulative profits reinvested in the organization rather than distributed as dividends. They reflect the organization’s ability to generate resources internally, supporting working capital, expansion, and long-term sustainability.

Option A is incorrect: retained earnings are not the same as dividends.

Option B is incorrect: retained earnings are not equal to excess cash.

Option D is incorrect: rating agencies use broader financial measures, not retained earnings alone.

Thus, the best explanation is Option C: retained earnings show that the organization has been able to generate and reinvest resources from its own operations.