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

In an organizational culture characterized by fear and blame, where employees are frequently penalized for mistakes, internal auditors are most likely to find low employee morale. Such an environment can lead to a lack of trust and motivation among employees, reducing their willingness to take initiative or innovate. Low morale can negatively impact productivity, increase turnover, and contribute to a toxic workplace culture. Recognizing these signs is crucial for internal auditors when assessing the effectiveness of the organization's control environment and overall governance.

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 Framework: Emphasizes the importance of a positive control environment and its impact on employee behavior and organizational performance.

The chief audit executive (CAE) is responsible for ensuring the professional development of the internal audit staff. This responsibility includes providing opportunities for ongoing training and development to maintain and enhance their competencies. References:

• IIA Standard 1230: Continuing Professional Development.
• IIA Practice Guide: Continuing Professional Development for Internal Auditors.

If the internal audit activity accepts a request to determine appropriate risk management responses for management, it would impair its independence. The role of internal audit is to provide assurance and consulting services, but not to take on management responsibilities such as making decisions on risk responses. Doing so would compromise the objectivity and independence required of the internal audit function. References: The IIA’s International Standards for the Professional Practice of Internal Auditing (Standards), specifically Standard 1100 - Independence and Objectivity, and Standard 1112 - Chief Audit Executive Roles Beyond Internal Auditing.

To determine the magnitude of risk events, organizations commonly assess both the potential impact of the risk event and its likelihood of occurrence. Impact refers to the extent of the consequences if the risk were to materialize, while likelihood refers to the probability of the risk event occurring. Together, these factors help in quantifying and prioritizing risks, enabling more effective risk management decisions.

Tolerance and appetite (A) are related to the organization's willingness to accept certain levels of risk, not directly to assessing the magnitude of specific risk events. Inherent and residual risk (B) describe risk levels before and after controls are applied, respectively. Cost and benefit (C) pertain to evaluating the financial implications and potential returns of risk management strategies.

References:

• COSO Enterprise Risk Management Framework
• IIA Global Technology Audit Guide (GTAG) "Management of IT Auditing"