IIA-CHAL-QISA Exam Dumps - IIA CIA Challenge Exam Questions and Answers

Introduction:

When the internal audit team lacks necessary skills for an ad-hoc assurance engagement, leveraging internal resources can be a practical solution.

Resolving Skill Gaps:

Using employees from other departments can provide the needed expertise while maintaining the engagement's integrity.

Options Analysis:

Option A: Declining the engagement may not be feasible and does not address the need.

Option B: Completing the engagement without the required skills can compromise quality.

Option C: Using employees from other departments brings in the necessary competencies and supports cross-functional collaboration.

Option D: Changing the scope may limit the effectiveness of the engagement.

Conclusion:

The acceptable resolution is to consider using employees from other departments in the organization to bring in the required skills for the engagement.

Verification of Controls: The auditor should verify that the new IT system addresses the previously identified risks. This involves reviewing the system documentation and ensuring that the controls in the new system effectively mitigate the risks.

Investment Portfolio Terms:

Cash Cow: A business unit with a dominant market position in a mature, slow-growth industry that generates consistent positive cash flow and profits. It requires little investment to maintain its market position and provides funds for other investments.

Star: A business unit with a high market share in a fast-growing industry. It requires significant investment to maintain its position and support further growth.

Question Mark: A business unit with a low market share in a high-growth industry. It requires substantial investment to increase market share.

Dog: A business unit with a low market share in a slow-growth industry, generating minimal profit or loss.

Characteristics of a Cash Cow:

Dominant Position: The acquired organization has a strong market position.

Mature Industry: The industry is mature with slow growth.

Positive Financial Income: Consistently generates positive cash flow and profits, requiring minimal investment.

Investment Strategy:

Portfolio Management: Investors typically use cash cows to fund other investments, maintaining a balanced portfolio that supports growth while providing stable returns.

References:

The term "cash cow" accurately describes an organization with a dominant position in a mature, slow-growth industry that consistently generates positive financial income, fitting the investor’s description​​​​.

When determining the level of staff and resources to dedicate to an assurance engagement, the most critical factor for the chief audit executive (CAE) is ensuring that the available resources possess the specific skill sets required for the engagement. This ensures that the internal audit team can effectively address the unique challenges and risks associated with the audit.

Skill Set Relevance: The CAE must match the skills and knowledge of the audit team to the specific requirements of the audit engagement. This includes technical expertise, industry knowledge, and any specialized skills needed for the audit.

Resource Allocation: Effective allocation involves not just the number of auditors but ensuring they have the right competencies to perform the audit tasks proficiently.

Impact on Audit Quality: Allocating resources with the appropriate skill set ensures the audit is thorough and of high quality, reducing the risk of overlooking critical issues.

References:

"Managing Internal Audit Activities," which discusses the importance of aligning audit resources with the necessary skills for specific engagements .

Definition of Risk Appetite:Risk appetite is the amount and type of risk an organization is willing to pursue or retain to achieve its objectives. It reflects the organization’s overall approach to risk-taking and is typically articulated at the highest level of the organization.

Introduction:

When verifying the validity of activities reported by a grantee, it is essential to gather evidence that the project was executed as intended and within the defined scope.

Effective Verification Methods:

A site visit allows the auditor to observe firsthand the activities and projects funded by the grant, ensuring they align with the grant's objectives and scope.

Options Analysis:

Option A: Visiting the grantee provides direct evidence of the project execution and alignment with the grant scope.

Option B: Verifying the final report against the initial budget request ensures financial compliance but does not confirm actual project activities.

Option C: Reconciling general ledger accounts verifies financial records but not the execution of activities.

Option D: Interviewing corporate affairs employees provides insight but not direct evidence of project execution.

Conclusion:

The best method to confirm the validity of the activities reported by a grantee is to visit the grantee and assess whether the project execution aligns with the defined grant scope.

Promoting objectivity in internal auditing involves ensuring that auditors avoid conflicts of interest and maintain independence in both fact and appearance. Policies that clearly define and give examples of inappropriate business relationships help auditors understand and avoid situations that could impair their objectivity.

Introduction:

Assurance engagements require internal auditors to maintain objectivity and avoid conflicts of interest.

Role of Internal Auditors in Assurance Engagements:

They must remain independent and not take on roles that could compromise their impartiality.

Options Analysis:

Option A: Determining the objectives, scope, and techniques can be part of their role but does not define an assurance engagement specifically.

Option B: The CAE obtaining skills or competencies personally is not a standard requirement for assurance engagements.

Option C: Not assuming management responsibilities is crucial to maintain independence and objectivity during assurance engagements.

Option D: While maintaining objectivity is important, it is not the distinguishing feature of being assigned to an assurance engagement.

Conclusion:

The key requirement indicating an internal auditor was assigned to an assurance engagement is that they must not assume management responsibilities during the engagement.

CSR Policy Development: In developing a Corporate Social Responsibility (CSR) policy, it is important that the principles of CSR are communicated and understood throughout the organization.

Integration into Decision-Making: Management’s responsibility includes ensuring that CSR principles are not only communicated but also integrated into the organization's decision-making processes at all levels. This ensures that CSR is part of the organizational culture and operational strategies.

Board’s Role: While the board has a role in overseeing and ensuring that CSR objectives are established and risks are managed, the day-to-day responsibility for integrating CSR into business operations lies with management.

IIA Guidance: According to IIA guidance, internal auditors should evaluate the design, implementation, and effectiveness of the organization’s ethics-related objectives, programs, and activities, which include CSR initiatives (Standard 2110 - Governance).

References:

Effective communication and integration of CSR principles ensure that the organization operates in a socially responsible manner, aligning its business practices with societal expectations and contributing to sustainable development​​​​.

Management-by-Objectives (MBO):This method involves setting clear, measurable objectives that employees and management agree on. It aligns individual performance with organizational goals.

Inclusive Goal-Setting:When goal-setting is inclusive, involving all team members, it fosters a sense of ownership and commitment to the goals. This collaboration enhances motivation and accountability.

Empirical Evidence:Research and practical experience indicate that MBO is more effective when employees at all levels are involved in the goal-setting process, as it leads to better performance and job satisfaction.

IIA Standards and Best Practices:Encouraging participation from all levels aligns with the principles of good governance and effective management, which are central to the IIA's standards and best practices.

References:

Principles of Management-by-Objectives (MBO) .