Pearson IIA-CIA-Part2 New Attempt

A periodic report from the chief audit executive (CAE) to the board typically includes information about the internal audit activity's purpose, authority, responsibility, and performance relative to the audit plan. This report ensures that the board is kept informed about the internal audit activity’s alignment with organizational goals, its independence, and any significant issues or deviations from the plan.

IIA References:

IIA Standard 2060: Reporting to Senior Management and the Board requires the CAE to report periodically to the board on the internal audit activity’s purpose, authority, responsibility, and performance relative to its plan. This standard ensures that the board has a clear understanding of how the internal audit activity is fulfilling its role.

The Practice Guide on Effective Communication with the Board recommends that the CAE provide regular updates on the internal audit activity’s progress against its plan and any significant issues that require the board’s attention.

An operational audit is conducted to evaluate whether an organization’s processes or areas are performing as intended, accomplishing their objectives, and doing so in an efficient and economical way. This type of audit focuses on the effectiveness, efficiency, and economy of operations.

IIA Definition of Operational Auditing:

Operational auditing involves reviewing and assessing the effectiveness and efficiency of operations. The goal is to ensure that the organization’s operations are running as intended and achieving their objectives in a cost-effective manner.

IIA Standard 2100 – Nature of Work:

This standard emphasizes that internal audit activity should evaluate the effectiveness and efficiency of operations, aligning with the objectives of an operational audit.

Key Aspects of Operational Audits:

Effectiveness: Evaluates whether objectives are being met.

Efficiency: Assesses whether resources are being used optimally.

Economy: Ensures that costs are minimized without compromising quality or performance.

Option A (Compliance audit): Focuses on whether the organization adheres to laws, regulations, and policies, not on operational efficiency.

Option C (Financial audit): Involves verifying the accuracy of financial records, not the operational performance.

Option D (Provider audit): This term is not commonly used in IIA guidance and does not accurately describe the scenario.

Detailed Explanation:Why Not Other Options?

When performing a consulting project to assist in making a decision on a new software system, the engagement objectives would be determined by understanding the engagement client's expectations. This ensures that the consulting engagement is aligned with what the client needs and expects, leading to more relevant and useful recommendations.

References:

IIA Standards: 2010 - Planning

IIA Practice Guide: Consulting Services

The chief audit executive (CAE) can best illustrate the value of the internal audit activity by reporting the overall performance resulting from the internal audit balanced scorecard. The balanced scorecard includes metrics that measure the effectiveness, efficiency, and impact of the internal audit function, providing a comprehensive view of its contributions to the organization. This approach demonstrates how internal audit activities align with and support the organization's strategic objectives. References:

The IIA’s Practice Guide on Measuring Internal Audit Performance.

The IIA’s Practice Guide on Internal Audit Effectiveness.