IIA-CIA-Part1 Exam Dumps - Essentials of Internal Auditing

According to the IIA's mandatory guidance on independence, allowing senior management to have influence over the CAE’s salary adjustments could potentially compromise the independence of the internal audit function. The board should independently approve the CAE's salary without seeking senior management's recommendation to maintain the internal audit function's independence.References: The Institute of Internal Auditors (IIA) - International Standards for the Professional Practice of Internal Auditing, specifically standards related to independence.

ISO 31000 outlines risk management principles and guidelines, including the consideration of external context in the risk management process. The external context refers to the environment in which the organization operates. This includes, but is not limited to, cultural, social, political, legal, regulatory, financial, technological, economic, and competitive environments, both international and national. Therefore, option C, "The regulatory and competitive environment," is part of the external context for risk management according to ISO 31000.References:

ISO 31000:2018, Risk management - Guidelines

The internal audit activity contributes to the implementation of the risk management framework by assisting with the prioritization of identified risks. This is done through the provision of assurance and consulting services that help the organization to understand which risks are most significant and how they should be addressed based on their impact and likelihood.References: IIA Performance Standards on risk management; literature on internal audit’s role in risk assessment and management.

The role of the board in organizational governance most accurately involves the responsibility for the outcome of the process. This encompasses overseeing the strategic direction of the organization, ensuring that corporate objectives are met, and that the management’s activities align with the overall strategic vision and risk appetite of the organization. The board's oversight role is crucial in ensuring effective governance and accountability throughout the organization.References: The Institute of Internal Auditors (IIA) - International Standards for the Professional Practice of Internal Auditing

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The internal auditor should examine application controls, which directly relate to specific computer applications. These controls ensure the accuracy, completeness, and authorization of transactions processed by the system. Since the auditor's concern is whether sales staff can modify orders after shipping, which involves transactional changes in a specific application, application controls are the appropriate focus.References: Information systems auditing standards and best practices.

When faced with a potential conflict of interest, as in the case where an internal auditor learns of a large loan made to another auditor's relative, the appropriate action is to refer the matter to higher authorities within the organization. Option B, having the chief audit executive and management determine whether the auditor should continue with the audit engagement, ensures that any potential conflict is managed properly and maintains the integrity of the audit process.References: The Institute of Internal Auditors (IIA) - International Standards for the Professional Practice of Internal Auditing.

The Chief Audit Executive (CAE) is primarily responsible for ensuring internal auditors’ continuing professional development. The CAE plays a crucial role in setting the tone and priorities for the audit function, including the professional growth of the audit staff, to maintain the competence and effectiveness of the internal audit activity.References: International Standards for the Professional Practice of Internal Auditing, particularly those related to human resources management within audit functions.

Conducting training sessions on fraud that should be attended by senior management and staff is the most effective approach to address the issue of senior management's limited understanding of fraud. Training provides direct education on what constitutes fraud, how it impacts the organization, and the role of management in preventing and detecting fraud, thereby increasing awareness and reducing the risk of fraud.References: Fraud risk management guidelines; IIA guidance on fraud awareness and training.