IIA-CIA-Part1 Exam Dumps - Internal Audit Fundamentals

Management's decision to set a specific price below which liquid fuel shall not be sold, but instead stored, represents Risk avoidance. This approach involves eliminating the risk entirely by avoiding the activity that generates the risk. In this scenario, by deciding not to sell fuel below a certain price, management avoids the risk of losses due to price fluctuations.

ISO 31000: Risk Management Guidelines.

COSO ERM Framework.

Assessing whether an organization's responses to risk are aligned with its risk appetite effectively can be done by analyzing the results of tests on controls and monitoring procedures implemented by management. This approach ensures that the measures taken are sufficient and appropriate in relation to the defined risk appetite, thereby providing assurance that the organization manages risks effectively.

Institute of Internal Auditors (IIA) Standards and Guidelines.

When deciding whether to rely on the work of internal auditors, external auditors often assess the objectivity of the internal audit activity. Objectivity assures that audits are performed impartially and without bias, which enhances the credibility of the audit work. This assessment is crucial for determining the reliability of the internal audit function's work for external audit purposes.

IIA Standard 1220: Objectivity, and external auditing standards regarding the use of internal auditors' work.

During an audit engagement that examines the effectiveness of risk management processes, the internal audit activity should evaluate how the organization manages fraud risk. This approach ensures that the organization’s risk management practices are comprehensive and effectively address all significant areas of risk, including the potential for fraud.

The Institute of Internal Auditors (IIA) - International Standards for the Professional Practice of Internal Auditing, especially those related to risk management.

According to IIA guidance, the internal audit activity can consult on CSR program design and implementation, serve as an advisor on CSR governance and risk management, and identify and mitigate risks to help meet the CSR program objectives. These roles enable the internal audit to add value through both advisory and assurance services regarding CSR, aligning with their expertise in governance, risk management, and control.

IIA guidance on the role of internal auditing in corporate social responsibility; Standards on advisory services.

The most appropriate statement for a Chief Audit Executive to include in the internal audit policy manual to promote objectivity is that internal auditors should limit the scope of an engagement if they become aware of a potential impairment of their objectivity in order to reduce the potential impact of the impairment on the engagement results. This guidance helps to manage and mitigate any risks to objectivity that might affect the integrity of audit findings.

The IIA’s standards and guidelines on objectivity and conflicts of interest, particularly those addressing how to handle and document potential impairments to objectivity.

The scenario where an internal audit manager fails to disclose a conflict of interest by not revealing that the process owner being audited is a relative is a clear violation of the integrity principle outlined in The IIA’s Code of Ethics. Integrity demands that internal auditors disclose all material facts known to them that, if not disclosed, may distort the reporting of activities under review or conceal unlawful practices.

The IIA's Code of Ethics

The risk committee is best suited to help the board identify and assess the effects of increased regulations on current industry lending practices. The risk committee focuses on overseeing the organization's risk management policies and procedures, ensuring that all risks, including regulatory risks, are identified, assessed, and managed appropriately. This committee is responsible for understanding the implications of regulatory changes and advising the board on how these changes may impact the organization's operations and strategic objectives.

The IIA’s Practice Guide on Risk Management.

COSO’s Enterprise Risk Management Framework.