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

A budget is an example of a management control technique. It is used by management to plan for, monitor, and control the financial resources of the organization, ensuring that spending aligns with the organization's strategic objectives and financial constraints.References: Management control systems and techniques in organizational management literature.

The effectiveness of the control environment is a fundamental aspect that internal auditors must consider to ensure a comprehensive assessment of the adequacy of controls. The control environment sets the tone at the top and is the foundation on which the rest of the control structure is built, influencing the effectiveness and robustness of specific controls.References: Institute of Internal Auditors (IIA) - International Standards for the Professional Practice of Internal Auditing

The most appropriate first step for the board to take when developing an effective system of governance is to identify key stakeholders and their expectations. Understanding stakeholders' expectations is fundamental to defining the governance framework that aligns with these needs and establishing the organization's strategic objectives and policies.References: IIA guidance on effective governance frameworks.

When evaluating whether management has selected appropriate risk responses, an internal auditor should consider the organization's risk appetite—the amount and type of risk that an organization is prepared to pursue, retain, or take. Risk appetite sets the boundaries within which risk responses should be formulated. Risk tolerance and capacity are related concepts, but risk appetite is a more direct measure of whether a particular risk response aligns with organizational goals and strategy.References: Institute of Internal Auditors (IIA) - International Standards for the Professional Practice of Internal Auditing