IIA-CIA-Part1 Exam Dumps - Essentials of Internal Auditing

According to The IIA's Core Principles for the Professional Practice of Internal Auditing, one of the key principles is that internal auditors should be objective and free from undue influence (independence). The correct option that aligns with these principles is B, where final reports from consulting engagements provide a summary of findings and ensure that the auditor’s advice is distinctly separated from management's decisions. This separation supports the principle of objectivity and avoids conflicts of interest, which is fundamental in upholding the integrity and independence of the internal audit function.

The IIA's Core Principles for the Professional Practice of Internal Auditing

An evaluation of the current performance and compensation program would be the most effective control to address the underlying cause of fraudulent behavior described. The pressures from unrealistic targets and aggressive monitoring likely encouraged employees to engage in fraudulent account openings. By evaluating and potentially revising these targets and the associated compensation schemes, the bank could mitigate the pressures that lead to such unethical behaviors.

Standards on the role of internal control systems in preventing and detecting fraud, including guidance on managing performance and compensation to align with ethical standards.

The most effective approach for an internal auditor to assess whether the organization supports a culture of tolerance and open communication, particularly in the context of reported issues within a large manufacturing plant, is to evaluate organization policies and procedures for references related to encouraging tolerance and open communication. This method directly targets the formal expressions of the organization's values and rules, offering concrete evidence of stated commitments and practices.

Auditing cultural aspects and workplace environment involves reviewing formal policies and procedures to ensure they align with stated values, as recommended in IIA guidance on assessing organizational culture.

The scenario where managers who have been with the organization for several decades become aware that newly hired, younger managers are being moved more quickly into senior positions best illustrates a rationalization as the root cause of potential fraud. This situation could lead these managers to feel justified in committing fraud, believing they are undervalued or unfairly treated, which is a common form of rationalization in fraudulent activities.

Fraud triangle theory, which includes rationalization as one of the key elements leading to fraud, as discussed in various IIA resources on fraud and ethical behavior.

Fraud involving significant amounts, such as theft using collusion for more than $10,000, should be reported to the audit committee at the next meeting. This type of fraud indicates a higher level of risk and potential impact on the organization, which makes it critical for the audit committee to be informed promptly so that appropriate measures can be taken.

Guidelines on fraud reporting from the Institute of Internal Auditors

The best way for internal auditors to demonstrate their proficiency to effectively carry out their professional responsibilities is to obtain appropriate professional certifications or other designations. These credentials, such as Certified Internal Auditor (CIA) or Certified Information Systems Auditor (CISA), are recognized indicators of an auditor’s commitment to continuing education, professionalism, and adherence to industry standards.

IIA Standards for the Professional Practice of Internal Auditing and Continuing Professional Education requirements

The best example of a computer forensic audit activity among the options provided is when an internal auditor recovers emails of an employee who was suspected of fraudulent activities. Computer forensics involves the application of investigation and analysis techniques to gather and preserve evidence from a particular computing device in a way that is suitable for presentation in a court of law. Recovering emails for the purpose of investigating suspected fraud aligns well with these practices.

Computer forensic audit techniques are commonly discussed in IIA publications and training related to forensic auditing and fraud examination.

A risk register would be most useful for an internal auditor assessing the effectiveness of the organization's risk responses. This tool lists all identified risks along with their severity, ownership, and the actions taken to mitigate them, making it a key resource for evaluating whether the responses have been effective and align with the organization’s risk appetite and management strategies.

IIA guidance on risk assessment and management