IIA Updated IIA-CIA-Part1 Exam Questions and Answers by antoni

The organizational independence of the internal audit activity is best demonstrated when the Chief Audit Executive (CAE) reports directly to the board. This reporting relationship helps to maintain the independence of the internal audit function by providing a clear line of communication and accountability to the governing body that is separate from the management of the organization, thus avoiding potential conflicts of interest.References: IIA Standard on Organizational Independence.

An example of the chief audit executive (CAE) demonstrating due professional care is by assessing the audit staff's knowledge and skills annually to determine whether additional resources are needed to fulfill the internal audit plan. This practice ensures that the internal audit team is adequately equipped in terms of skills and competencies to meet the organization's audit needs effectively and professionally.References: Institute of Internal Auditors (IIA) - International Professional Practices Framework (IPPF)

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An effective risk management process is indicated by the organization's ability to identify and adequately assess significant risks. This involves understanding the full range of potential risks the organization faces and evaluating their magnitude and likelihood in a way that aligns with the organization's risk appetite and capacity. This ability ensures that strategic decisions are informed and that risks are managed proactively. References: COSO Framework on Enterprise Risk Management, which outlines the importance of identifying and assessing risks in relation to an organization's objectives.

The most appropriate response for a chief audit executive (CAE) who has been asked to oversee the organization's insurance function is to report the request to the board and recommend alternate processes to obtain assurance related to insurance activities. Taking on operational responsibilities such as overseeing the insurance function could impair the objectivity and independence of the internal audit activity, making it difficult to audit those activities impartially in the future.References: IIA Standards on independence and objectivity, particularly Standard 1130: Impairment to Independence or Objectivity.

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