IIA-CIA-Part2 Exam Dumps - Practice of Internal Auditing

Best practices in internal auditing emphasize the importance of follow-up on engagement outcomes to ensure that agreed-upon actions are implemented and effective. According to Standard 2500 – Monitoring Progress, the chief audit executive must establish and maintain a system to monitor the disposition of results communicated to management. This ensures that corrective actions are taken and that the internal audit function fulfills its role in improving the organization's governance, risk management, and control processes. Allocating resources for follow-up is crucial to maintain accountability and support continuous improvement.

Institute of Internal Auditors (IIA), International Standards for the Professional Practice of Internal Auditing (Standards), Standard 2500 – Monitoring Progress.

The internal audit charter is a formal document that defines the internal audit activity's purpose, authority, and responsibility. It is crucial for establishing the internal audit function's independence and objectivity. When the internal audit charter is properly drafted and approved by the appropriate parties, it provides a clear mandate for the internal audit activity and sets the foundation for its operations. This ensures that the internal audit activity can function independently without undue influence from management.

According to the IIA's International Standards for the Professional Practice of Internal Auditing (Standards), specifically Standard 1000 (Purpose, Authority, and Responsibility), the internal audit charter is essential in defining the internal audit activity's role and ensuring its independence​​.

The tone at the top refers to the ethical and cultural attitude demonstrated by senior leadership. If employees fear blame for reporting risks, this reflects a poor tone at the top. Changing leadership’s attitude to encourage openness, transparency, and a no-blame culture is necessary to improve communication of risks. While accountability, leadership, and ethics matter, the root cause here is the tone at the top.

A consulting engagement in internal auditing involves providing advisory and related client service activities, the nature and scope of which are agreed upon with the client. These are intended to add value and improve an organization's governance, risk management, and control processes. Helping in the design of the risk management program is a consulting activity because it involves advising management on how to establish or improve the processes for identifying, assessing, and managing risks. This is different from assurance engagements, which primarily focus on assessing existing processes.

The Institute of Internal Auditors (IIA) Standard 2010: Planning

IIA Practice Advisory 2010-1: Linking the Audit Plan to Risk and Exposures

To ensure that recommendations for enhancing internal controls have been effectively implemented, the internal auditor should conduct appropriate testing to verify management responses. This involves re-performing procedures, reviewing documentation, and possibly observing operations to confirm that the corrective actions have been adequately executed and are effective. Simply seeking a management assurance declaration (Option B) or observing corrective measures (Option A) may not provide sufficient evidence of proper implementation. Following up during the next scheduled audit (Option C) may delay the verification process, potentially allowing risks to persist.

IIA Standard 2500: Monitoring Progress.

IIA Practice Guide on Follow-up Processes in Internal Auditing.

The primary reasons for outsourcing internal audit activities typically include accessing a wider range of skills and competencies, complementing existing expertise for specific engagements, and strengthening core audit functions. Contingency planning, while beneficial, is not a primary reason for outsourcing internal audit activities as it pertains more to risk management strategies rather than the core objectives of outsourcing. References: = IIA’s Practice Advisory 1210.A1-1: Obtaining External Service Providers to Support or Complement the Internal Audit Activity.

In addition to gathering information, a primary objective of a client interview during the planning stage of an audit engagement is to establish rapport with the client. Building rapport helps in fostering a cooperative relationship, ensuring that the client is open and forthcoming with information, which can significantly enhance the effectiveness of the audit.

IIA References:

IIA Standard 2201: Planning Considerations suggests that internal auditors should establish good communication and rapport with clients during the planning phase to facilitate the audit process.

The Practice Guide on Effective Interviewing Techniques emphasizes that establishing rapport during initial meetings is crucial for gaining the client’s trust and cooperation throughout the audit.

Step by Step Comprehensive Detailed Explanation with References:

Introduction:

Internal auditors use process mapping to document and understand the steps involved in a process.

Purpose of Narrative Memoranda:

Narrative memoranda are written descriptions that outline the steps of a process, often used when the process is straightforward.

Options Analysis:

Option A: Detailed risk assessment is usually more comprehensive and may require flowcharts or other detailed diagrams.

Option B: Identifying individuals who perform key roles typically requires organization charts or responsibility matrices.

Option C: Narrative memoranda are best suited for explaining simple processes in a clear and concise manner.

Option D: Documenting outputs that support other activities might require more detailed mapping techniques.

Conclusion:

Narrative memoranda are effective for explaining simple processes, providing a straightforward and understandable framework.

Internal Audit Standards and Practice Guides.