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

To maintain organizational independence, the internal audit activity must be free from interference in determining the scope of their work. This independence is crucial for ensuring that the audit process is objective and unbiased, allowing auditors to assess areas they deem necessary without external pressures or limitations. This autonomy helps in providing an honest and accurate evaluation of the organization's controls, risk management, and governance processes.

References:

• The Institute of Internal Auditors (IIA) Standards, specifically Standard 1100 – Independence and Objectivity.
• IIA's International Professional Practices Framework (IPPF).
• "Internal Auditing: Assurance & Advisory Services" by IIA, Chapter on Independence and Objectivity.

When using the maturity model approach for assessing an organization's risk management program, the activity of "monitor and review" is typically examined. The maturity model approach evaluates the development and effectiveness of risk management practices over time, identifying areas for improvement and measuring progress against established benchmarks.

Monitoring and reviewing involve regularly assessing the risk management processes and outcomes to ensure they remain effective and are continuously improved. This includes evaluating the implementation of risk management strategies and making necessary adjustments based on performance and changing conditions.

References:

• IIA Practice Guide: Assessing the Adequacy of Risk Management Using ISO 31000
• COSO Enterprise Risk Management Framework

The proper drafting and approval of the internal audit charter by the appropriate parties (e.g., the board or audit committee) offer the clearest evidence that the internal audit activity has achieved organizational independence. The internal audit charter formally defines the purpose, authority, and responsibility of the internal audit activity, including its independence from management and its direct reporting line to the board or audit committee. This document is foundational for establishing and maintaining the independence of the internal audit function.

References:

• IIA Standard 1000: Purpose, Authority, and Responsibility
• IIA Standard 1110: Organizational Independence

The organization’s decision to cease operations in a market due to increasing volatility and uncertainties represents a risk avoidance technique. Risk avoidance involves actions taken to eliminate the exposure to risk entirely, often by discontinuing the activities that generate the risk. In this scenario, by exiting the market, the organization avoids the potential negative impacts associated with the volatile and uncertain environment.

References:

• The IIA Standards: Standard 2120 – Risk Management: "The internal audit activity must evaluate the effectiveness and contribute to the improvement of risk management processes."
• COSO ERM Framework: Describes risk avoidance as a strategy where organizations opt to avoid risk by discontinuing the activities that produce the risk.