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CIA Part 1 Jan - May 2025 > 2. Independence, Objectivity, Proficiency, Care and Quality (40% 50 MCQs) > Flashcards

2. Independence, Objectivity, Proficiency, Care and Quality (40% 50 MCQs) Flashcards

1
Q

Section A – Basic

Organizational Independence (Importance & functional reporting etc.)
Attribute Standard 1100 - Independence & Objectivity

Independence (IA attribute)

list 4

A
  • Independence: freedom from threats to carry out internal audit activity & Report any bias or interference to the Board.
  • Access: CAE access to Board and CEO
  • Reporting: CAE reports to both the Audit Committee and senior management.
  • Annual Check: CAE must confirm the audit’s independence to the Board each year.
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2
Q

Section A – Basic

Organizational Independence (Importance & functional reporting etc.)
Dual Reporting: Functional to Board & Administrative to CEO
Functional Reporting (Attribute Standard 1110 - Org Independence)

Independence (IA attribute)

list 10

A

Board approves;
1. Internal Audit Charter (IA Charter)
2. Risk Based Internal Audit Plan
3. Budget & Resource Plan
4. Performance Appraisal
5. Appointment and Removal of CAE
6. Remuneration
7. Scope Limitation
8. Inquiries about Management

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3
Q

Section A – Basic

Organizational Independence (Importance & functional reporting etc.)
Dual Reporting: Functional to Board & Administrative to CEO

Administrative Reporting

Independence (IAD attribute)

list 1

A

Report to CEO

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4
Q

Section B – Basic

Impairment of Internal Audit Independence (Identify)
Attribute Standard 1110 - Conformance

Independence (IAD attribute)

A
  • AC and IA Charter – Describe AC oversight duties
  • CAE JD and Performance Evaluation – Note reporting relationship and supervisory oversight
  • IA Policies – Addresses independence, board reporting reflecting in org chart
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5
Q

Section B – Basic

Impairment of Internal Audit Independence (Identify)
Attribute Standard 1111- Conformance

Independence (IAD attribute)

A

Board meetings agendas and minutes demonstrate CAE direct interaction with Board/AC.

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6
Q

Section C - Proficient

Individual Auditor’s Impairment (Identify)
Attribute Standard 1100

Objectivity (IA attribute)

A

Objectivity is
- impartial
- unbiased mindset
- avoid conflict of interest (CoI)

Threats to objectivity must be managed at
- internal auditor
- engagement
- functional
- organizational level.

check again this note.

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7
Q

Section C - Proficient

Individual Auditor’s Impairment (Identify)
Attribute Standard 1120

Objectivity (IA attribute)

A
  • Conflict of Interest (CoI) – not in the best interest of the org and prejudice in performing duties.
  • CoI exists even if no unethical or improper act results.
  • IA Policies shall demonstrate expectation and requirement for unbiased mindset.
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8
Q

Section C - Proficient

Individual Auditor’s Impairment (Identify)
Attribute Standard 1130 - Impairment of Independence & Objectivity

Objectivity (IA attribute)

list 9

A
  1. Personal CoI
  2. Scope limitation
  3. Restriction to access records or personnel or property
  4. Resource limitation (such as funding)
  5. Self-review
  6. Self-interest
  7. Familiarity
  8. Bias
  9. Undue Influence
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9
Q

Section D - Proficient

Policies to Promote Objectivity (Analyze)
Attribute Standard 1300 - Independence issue led to Objectivity Impairment

Objectivity (IA attribute)

list 4

A
  • CAE broader responsibility
  • Auditor Supervisor broader responsibility
  • No direct communication with Board
  • Budget is reduced

check again this note

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10
Q

Section D - Proficient

Policies to Promote Objectivity (Analyze)
Attribute Standard 1300 - Reporting

Objectivity (IA attribute)

Real Impairment

A

Impairment is real:

  • Discuss with the Board and senior management.
  • Report in writing to Board & its likely impact on overall engagement.
  • Seek support to resolve the impairment issue.
  • if potential impairment, made disclosure before acceptance of engagement.
  • Specific Impairment
    1. Impairment by Prev Assignment
    2. Impairment by non audit assignment
    3. Impairment by consulting assignment
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11
Q

Section D - Proficient

Policies to Promote Objectivity (Analyze)
Attribute Standard 1300 - Reporting

Objectivity (IA attribute)

Not Real Impairment

A

Impairment is not real:

  • Discuss concern with management.
  • Plan and document engagement meetings.
  • Explain the issue and make disclosures in the report.
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12
Q

Section D - Proficient

Policies to Promote Objectivity (Analyze)
Attribute Standard 1300 - Scope Limitation

Objectivity (IA attribute)

A

Restriction place on internal audit activity
Reporting

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13
Q

Section A - Basic

IA Knowledge, Skills & Competence (In-house or Acquire)
Attribute Standard 1200 - Auditor Proficiency

Proficiency & Competence

A

Proficiency
* a collective term.
* Refers to overall IA knowledge, skills, and competencies.

Competence
- ability to perform job properly based on knowledge, skill & behaviour.

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14
Q

Section A - Basic

IA Knowledge, Skills & Competence (In-house or Acquire)
Attribute Standard 1200 - Auditor Proficiency

Proficiency & Competence

5 points

A
  • Proficiency gained through experience, CPD, and certifications.
  • Engagements must be conducted with professional care.
  • Internal auditors must ensure proficiency.
  • Proficiency depends on having necessary competencies.
  • CAE may decline engagements if skills are lacking.
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15
Q

Section A - Basic

IA Knowledge, Skills & Competence (In-house or Acquire)
Attribute Standard 1200 - Competency Framework

Proficiency & Competence

list 10

A
  1. Professional Ethics
  2. IA management
  3. IPPF
  4. Governance, Risk & Controls
  5. Business Acumen
  6. Communication
  7. Persuasion and Collaboration
  8. Critical Thinking
  9. IA delivery
  10. Improvement & Innovation
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16
Q

Section B - Proficient

Technical Skills & Soft Skills
IA Resources - Internal

IA Resources

list 5

A
  • CAE reviews skills annually.
  • Conduct staff performance reviews.
  • Ensure CPDs are completed.
  • Record IA background info (skills, projects, training needs).
  • Outsource or co-source audits if in-house expertise is lacking.
17
Q

Section B - Proficient

Technical Skills & Soft Skills
IA Resources - External

IA Resources

list 5

A
  • IA can outsource all audit activities.
  • Oversight remains with the organization.
  • Audits must follow IPPF standards.
  • Engagement clients are unacceptable.
  • External sources may include audit firms, consultancies, or universities.
18
Q

Section C - Proficient

Due Professional Care

Due Professional Care & CPD

A
  • Reasonably prudent & competent IA,
  • reasonable care not absolute care,
  • conformance with IIA Code of Ethics & IPPF,
  • IA SOP are systematically provide disciplined approach.
19
Q

Section C - Proficient

Due Professional Care
Attribute Standard 1220 A1 vs Attribute Standard 1220 C1 - Due Professional Care

Due Professional Care & CPD

A

Assurance Engagement:

  • Assess extent of work needed.
  • Consider risk maturity and organizational governance.
  • Perform cost-benefit analysis and evaluate error, fraud, or noncompliance risks.
  • Utilize technology and data analytics tools.

Consultancy Engagement:

  • Understand client needs and expectations.
  • Evaluate work complexity.
  • Conduct cost-benefit analysis.
20
Q

Section D - Proficient

CPD’sw

Due Professional Care & CPD

list 9

A

Auditor can use
1. self-assessment tools (competency framework)
2. on job training
3. coaching
4. mentoring
5. external training
6. conference
7. seminar
8. research
9. study plan

(Practicing CIA - 40 hrs and Non-practicing 20 hrs of CPDs annually)

21
Q

Section A - Basic

QA (Internal & External Assessment)
Internal Assessment

Quality Assurance & Improvement Program (QAIP)

A
  • Ongoing: Assess engagement level, planning, supervision, working papers, reports, reviews, KPIs, and feedback.
  • Periodic: Review by Senior Auditor or CIA, conformance with standards and code of ethics.
  • Reporting: CAE reports results to Board and Management.
22
Q

Section A - Basic

QA (Internal & External Assessment)
External Assessment

Quality Assurance & Improvement Program (QAIP)

A
  1. Frequency: Every 5 years.
  2. Assessors: Qualified Independent Assessor or team.
  3. CAE Duties: Discuss form, frequency, and assessor independence with the Board.
  4. Assessment Approaches:
    * Full External Assessment.
    * Self-Assessment with Independent External Validation (SAIV).
23
Q

Section A - Basic

QA (Internal & External Assessment)
External Assessment

Quality Assurance & Improvement Program (QAIP)

A
  1. Assessor Competence: Must be knowledgeable in IPPF and quality assessment processes.
  2. Conflict of Interest: Assessors must avoid conflicts, including connections to the organization.
  3. Peer Review: Conducted by unrelated organizations.
  4. Validation: May involve one or more independent individuals.
24
Q

Section B - Basic

QA Results (Board / Governing Body)
Reporting of QAIP

Quality Assurance & Improvement Program (QAIP)

A
  • CAE must develop and oversee QAIP.
  • Encourage Board oversight.
  • QAIP applies to both assurance and consulting engagements.
  • Conduct internal, ongoing, and external assessments.
  • QAIP components: assessments, result communication, conformance disclosures.
  • KPIs: audit plan completion, cycle time, accepted recommendations, customer satisfaction.
  • CAE must understand IPPF elements.
  • Periodically evaluate and update QAIP.
  • External review every 5 years.
25
Q

Section B - Basic

QA Results (Board / Governing Body)
Reporting of QAIP

Quality Assurance & Improvement Program (QAIP)

A
  • apply to both assurance & consulting engagement
  • Shall be ongoing, internal periodic & external assessment.
  • QAIP consist of 5 compenents;
    1. internal
    2. external assessment
    3. communication of results
    4. conformance (generally and partially conforms)
    5. non-conformance (does not conforms) disclosures
  • External assessment - every 5 years
  • CAE should encourage Board oversight in QAIP
26
Q

Section C - Basic

IPPF (Conformance vs. Nonconformance)
Deming Cycle

Quality Assurance & Improvement Program (QAIP)

A

CAE Use Deming Cycle:
1. Plan – Establish standards
2. Do – Establish process
3. Check – Compare actual results
4. Act – Provide feedback

CIA Part 1 Jan - May 2025 (7 decks)

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