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

Requiring management approval for expenses is an effective control to prevent inappropriate use of organizational funds and falsification of financial records. This control ensures that all expenditures are reviewed and approved by a higher authority, providing a check against potential misuse of funds. It helps in verifying the legitimacy and necessity of expenses, thereby reducing the risk of fraudulent activities by employees.

References:

• The Institute of Internal Auditors (IIA) Standards and Practice Advisories.
• COSO Internal Control – Integrated Framework.
• "Internal Auditing: Assurance & Advisory Services" by IIA, Chapter on Expense Management and Approval Controls.

Assurance services involve three parties: the auditor, the auditee, and the user of the report. In consulting services, the internal audit activity and the client work together directly, generally involving only two parties. References:

• IIA’s International Professional Practices Framework (IPPF).
• IIA Practice Guide: Assurance and Consulting Services.

When the internal audit activity does not have the appropriate skills to review the organization's compliance with recently introduced legislation on international transfer pricing, the most appropriate course of action is to outsource the engagement to an external audit firm that has the necessary expertise. This ensures that the review is conducted thoroughly and accurately by professionals with specialized knowledge, maintaining the quality and reliability of the audit work while addressing the specific requirements of the engagement.References:

• The IIA’s International Standards for the Professional Practice of Internal Auditing (Standards) - Standard 1210: Proficiency.
• The IIA’s Practice Guide on Coordinating Internal and External Audit Activities.

Internal audit activities are expected to contribute to the improvement of the organization's governance processes. To effectively fulfill this role, internal auditors must work with the board to agree on the scope of their governance assessments. This includes defining the range of activities to be reviewed, the depth of these reviews, and the time period covered. Achieving this agreement ensures that the internal audit's evaluation aligns with the board's expectations and the organization's strategic objectives, thereby enhancing the overall governance framework.

References:

• IIA Standard 2110: Governance
• IIA Practice Guide: Assessing Organizational Governance