IIA-CHAL-QISA Exam Dumps - Qualified Info Systems Auditor CIA Challenge Exam

Application controls are specific to software applications and ensure that transactions are processed correctly and accurately. They include controls over input, processing, and output. In this scenario, examining application controls will help determine if sales staff can modify orders after shipping, as these controls directly impact how data is handled within the system.

References:

"Information Technology Auditing," which explains the role of application controls in maintaining data integrity and security.

Professional Responsibility:Internal auditors are expected to demonstrate their commitment to professional standards and ethics.

Code of Ethics:The IIA’s Code of Ethics outlines principles that internal auditors must follow, including integrity, objectivity, confidentiality, and competency.

Annual Declaration:Signing an annual declaration reinforces the auditor's commitment to these principles and ensures ongoing adherence to the professional standards.

Demonstration of Due Care:By signing this declaration, auditors formally acknowledge their responsibility to uphold ethical standards, which is a demonstration of due professional care.

References:

The IIA’s Code of Ethics.

The IIA’s International Standards for the Professional Practice of Internal Auditing.

Key performance indicator (KPI) reports are essential tools for tracking and evaluating the performance of various processes and activities within an organization. By reviewing these reports in detail during monthly staff meetings, operational management in the IT department aims to identify any discrepancies or issues promptly. This continuous monitoring helps to prevent a "monitoring gap," which is the failure to adequately oversee and assess operations, potentially leading to undetected problems or inefficiencies

Ensuring Compliance:To ensure that audit findings and recommendations are addressed, formal follow-up procedures are necessary.

Follow-up Procedures:These procedures involve tracking the implementation of recommendations and verifying that management has taken appropriate action or has accepted the risks of not acting.

Reporting to Management:Regular reporting on the status of follow-up actions helps maintain accountability and transparency.

Standard Requirement:This aligns with the IIA’s Standard 2500 – Monitoring Progress, which requires internal audit activities to establish and maintain a system to monitor the disposition of results communicated to management.

References:

The IIA’s International Standards for the Professional Practice of Internal Auditing, specifically Standard 2500 on Monitoring Progress.

Conflict of Interest: For both assurance and consulting engagements, it is crucial to avoid conflicts of interest. An auditor assessing processes they were previously responsible for can compromise objectivity and independence.

IIA Standards: The IIA's Code of Ethics and standards emphasize maintaining objectivity and avoiding conflicts of interest. This is particularly important in consulting engagements where the auditor's recommendations could be influenced by prior roles.

Appropriate Action:

Assurance Engagements: For assurance engagements, prior knowledge might be beneficial but still raises concerns about independence. Declining the consulting engagement due to previous responsibilities ensures objectivity.

Introduction:

Inherent risk refers to the susceptibility of an assertion to a material misstatement, assuming no related controls.

IPO Risks:

Initial Public Offerings (IPOs) inherently carry a high level of risk due to the uncertainty and complexity involved in the process, the lack of historical data, and market volatility.

Options Analysis:

Option A: Residual risk is the risk remaining after controls are applied.

Option B: Net risk is not a standard term in audit risk assessments.

Option C: Inherent risk is the appropriate term for the risks associated with an IPO, which exist before considering any controls.

Option D: Underlying risk is not a standard audit term.

Conclusion:

The risk associated with an IPO for a new stock is best described as inherent risk due to the nature of the uncertainties involved.

When internal audit resources are limited, it is crucial to focus on the most critical aspects of the control environment. Preventive key controls are designed to prevent errors or irregularities from occurring, which are essential for maintaining a strong control environment. Given the mature control environment of the organization, prioritizing preventive key controls ensures that potential issues are addressed before they materialize, providing a proactive approach to risk management.

A control weakness occurs when there is a deficiency in internal controls that could allow errors or fraud to occur. While the act of buyers promptly updating the vendor listing might seem efficient, it could bypass necessary oversight and approval processes. This could lead to unauthorized or inappropriate vendors being added, increasing the risk of fraud or favoritism. Effective internal control requires that such updates be reviewed and approved by an independent party to ensure accuracy and appropriateness.