Glossary IIA

Question 1

Add Value

Answer 1

The internal audit activity adds value to the organization (and its stakeholders) when it provides objective and relevant assurance; and contributes to the effectiveness and efficiency of governance; risk management; and control processes.

Question 2

Adequate Control

Answer 2

Present if management has planned and organized (designed) in a manner that provides reasonable assurance that the organization’s risks have been managed effectively and that the organization’s goals and objectives will be achieved efficiently and economically.

Question 3

Assurance Services

Answer 3

An objective examination of evidence for the purpose of providing an independent assessment on governance; risk management; and control processes for the organization. Examples may include financial; performance; compliance; system security; and due diligence engagements.

Question 4

Board

Answer 4

The highest level governing body (e.g.; a board of directors; a supervisory board; or a board of governors or trustees) charged with the responsibility to direct and/or oversee the organization’s activities and hold senior management accountable.

Question 5

Charter

Answer 5

The internal audit charter is a formal document that defines the internal audit activity’s purpose; authority; and responsibility. The internal audit charter establishes the internal audit activity’s position within the organization; authorizes access to records; personnel; and physical properties relevant to the performance of engagements; and defines the scope of internal audit activities.

Question 6

Chief Audit Executive

Answer 6

Chief audit executive describes the role of a person in a senior position responsible for effectively managing the internal audit activity in accordance with the internal audit charter and the mandatory elements of the International Professional Practices Framework. The chief audit executive or others reporting to the chief audit executive will have appropriate professional certifications and qualifications.

Question 7

Code of Ethics

Answer 7

The Code of Ethics of The Institute of Internal Auditors (IIA) are Principles relevant to the profession and practice of internal auditing; and Rules of Conduct that describe behavior expected of internal auditors. The Code of Ethics applies to both parties and entities that provide internal audit services. The purpose of the Code of Ethics is to promote an ethical culture in the global profession of internal auditing.

Question 8

Compliance

Answer 8

Adherence to policies; plans; procedures; laws; regulations; contracts; or other requirements.

Question 9

Conflict of Interest

Answer 9

Any relationship that is; or appears to be; not in the best interest of the organization. A conflict of interest would prejudice an individual’s ability to perform his or her duties and responsibilities objectively.

Question 10

Consulting Services

Answer 10

“Advisory and related client service activities; the nature and scope of which are agreed with the client; are intended to add value and improve an organization’s governance; risk management; and control processes without the internal auditor assuming management responsibility.
Examples include counsel; advice; facilitation; and training.”

Question 11

Control

Answer 11

Any action taken by management; the board; and other parties to manage risk and increase the likelihood that established objectives and goals will be achieved. Management plans; organizes; and directs the performance of sufficient actions to provide reasonable assurance that objectives and goals will be achieved.

Question 12

Control Environment

Answer 12

The attitude and actions of the board and management regarding the importance of control within the organization. The control environment provides the discipline and structure for the achievement of the primary objectives of the system of internal control.

Question 13

Component of Control Environment

Answer 13

“• Integrity and ethical values.
• Management’s philosophy and operating style.
• Organizational structure.
• Assignment of authority and responsibility.
• Human resource policies and practices.
• Competence of personnel.”

Question 14

Control Processes

Answer 14

The policies; procedures (both manual and automated); and activities that are part of a control framework; designed and operated to ensure that risks are contained within the level that an organization is willing to accept.

Question 15

Core Principles for the Professional Practice of Internal Auditing

Answer 15

The Core Principles for the Professional Practice of Internal Auditing are the foundation for the International Professional Practices Framework and support internal audit effectiveness.

Question 16

Engagement

Answer 16

A specific internal audit assignment; task; or review activity; such as an internal audit; control self-assessment review; fraud examination; or consultancy. An engagement may include multiple tasks or activities designed to accomplish a specific set of related objectives.

Question 17

Engagement Objectives

Answer 17

Broad statements developed by internal auditors that define intended engagement accomplishments.

Question 18

Engagement Work Program

Answer 18

A document that lists the procedures to be followed during an engagement; designed to achieve the engagement plan.

Question 19

External Service Provider

Answer 19

A person or firm outside of the organization that has special knowledge; skill; and experience in a particular discipline.

Question 20

Fraud

Answer 20

Any illegal act characterized by deceit; concealment; or violation of trust. These acts are not dependent upon the threat of violence or physical force. Frauds are perpetrated by parties and organizations to obtain money; property; or services; to avoid payment or loss of services; or to secure personal or business advantage.

Question 21

Governance

Answer 21

The combination of processes and structures implemented by the board to inform; direct; manage; and monitor the activities of the organization toward the achievement of its objectives.

Question 22

Impairment

Answer 22

Impairment to organizational independence and individual objectivity may include personal conflict of interest; scope limitations; restrictions on access to records; personnel; and properties; and resource limitations (funding).

Question 23

Independence

Answer 23

The freedom from conditions that threaten the ability of the internal audit activity to carry out internal audit responsibilities in an unbiased manner.

Question 24

Information Technology Controls

Answer 24

Controls that support business management and governance as well as provide general and technical controls over information technology infrastructures such as applications; information; infrastructure; and people.

Question 25

Information Technology Governance

Answer 25

Consists of the leadership; organizational structures; and processes that ensure that the enterprise’s information technology supports the organization’s strategies and objectives.

Question 26

Internal Audit Activity

Answer 26

A department; division; team of consultants; or other practitioner(s) that provides independent; objective assurance and consulting services designed to add value and improve an organization’s operations. The internal audit activity helps an organization accomplish its objectives by bringing a systematic; disciplined approach to evaluate and improve the effectiveness of governance; risk management and control processes.

Question 27

International Professional Practices Framework

Answer 27

The conceptual framework that organizes the authoritative guidance promulgated by The IIA. Authoritative guidance is composed of two categories – (1) mandatory and (2) recommended.

Question 28

Must

Answer 28

The Standards use the word “must” to specify an unconditional requirement.

Question 29

Objectivity

Answer 29

An unbiased mental attitude that allows internal auditors to perform engagements in such a manner that they believe in their work product and that no quality compromises are made. Objectivity requires that internal auditors do not subordinate their judgment on audit matters to others.

Question 30

Overall Opinion

Answer 30

The rating; conclusion; and/or other description of results provided by the chief audit executive addressing; at a broad level; governance; risk management; and/or control processes of the organization. An overall opinion is the professional judgment of the chief audit executive based on the results of a number of individual engagements and other activities for a specific time interval.

Question 31

Risk

Answer 31

The possibility of an event occurring that will have an impact on the achievement of objectives. Risk is measured in terms of impact and likelihood.

Question 32

Risk Appetite

Answer 32

The level of risk that an organization is willing to accept.

Question 33

Risk Management

Answer 33

A process to identify; assess; manage; and control potential events or situations to provide reasonable assurance regarding the achievement of the organization’s objectives.

Question 34

Should

Answer 34

The Standards use the word “should” where conformance is expected unless; when applying professional judgment; circumstances justify deviation.

Question 35

Should

Answer 35

The Standards use the word “should” where conformance is expected unless; when applying professional judgment; circumstances justify deviation.

Question 36

Significance

Answer 36

The relative importance of a matter within the context in which it is being considered; including quantitative and qualitative factors; such as magnitude; nature; effect; relevance; and impact. Professional judgment assists internal auditors when evaluating the significance of matters within the context of the relevant objectives.

Question 37

Standard

Answer 37

A professional pronouncement promulgated by the International Internal Audit Standards Board that delineates the requirements for performing a broad range of internal audit activities and for evaluating internal audit performance.

Question 38

Technology-based Audit Techniques

Answer 38

Any automated audit tool; such as generalized audit software; test data generators; computerized audit programs; specialized audit utilities; and computer-assisted audit techniques (CAATs).