Selected IIA-CHAL-QISA CIA Challenge Exam Questions Answers

Professional skepticism is an essential attitude for internal auditors, particularly when assessing the risk of fraud. According to the IIA's Practice Guide "Internal Auditing and Fraud", one of the red flags that may heighten an internal auditor’s professional skepticism is the presence of employees whose qualifications or credentials do not match the requirements of their positions. In this case, a procurement manager lacking the expected academic credentials raises concerns because it could indicate potential fraudulent activities such as unqualified decision-making or manipulation of procurement processes.

Authority Source: The internal audit charter is a formal document that defines the internal audit activity's purpose, authority, and responsibility. It grants internal auditors the right to access all records, personnel, and physical properties relevant to the performance of engagements.

Facilities Maintenance Reports: When an engagement supervisor contacts a third-party contractor for maintenance reports, the authority is derived from the internal audit charter, which ensures auditors have the necessary access to perform their duties.

Importance of the Charter: This ensures the independence and objectivity of the internal audit activity, providing a clear mandate for auditors to obtain information from external parties as needed.

Introduction:

The independence and objectivity of the internal audit function are paramount, especially when the CAE has had prior involvement in the area under review.

Scenario Analysis:

Option A: Previous consulting assignments may raise concerns but do not inherently impair independence if managed correctly.

Option B: A historical role in accounting functions is less problematic if sufficient time has passed and there is no ongoing influence.

Option C: Having been the payroll manager presents a direct conflict of interest, compromising the CAE's objectivity.

Option D: Reviews following consulting assignments are common practice and do not necessarily indicate a conflict.

Conclusion:

It is problematic for the CAE to provide assurance over payroll functions if they were previously the payroll manager, as this creates a clear conflict of interest and threatens audit objectivity.

Forensic auditing techniques provide a systematic approach to collecting and analyzing evidence related to fraud. The primary benefit of these techniques is the enhanced ability to gather comprehensive and detailed evidence, which leads to a greater understanding of how the fraud occurred and who was involved. This detailed evidence collection supports legal proceedings and helps in identifying control weaknesses that need to be addressed to prevent future frauds.

References:

"Forensic Auditing: Principles and Practices," which outlines the importance of evidence collection in understanding and combating fraud.