Exactprep IIA-CIA-Part1 Questions

When a risk assessment shows that the cost of addressing a particular risk is greater than the perceived benefit, the appropriate risk response approach is to accept the risk. Risk acceptance means acknowledging that the risk exists but deciding not to take any action to mitigate it, usually because the cost of mitigation is higher than the potential impact. This approach is a rational decision when the risk is deemed to have a low likelihood or impact, or when other controls are considered sufficient.

The IIA Standards: Standard 2120 – Risk Management: " The internal audit activity must evaluate the effectiveness and contribute to the improvement of risk management processes. "

COSO ERM Framework: Discusses risk response options including risk acceptance as a viable strategy when the cost-benefit analysis justifies it.

The best technique to detect fictitious vendors in the organization ' s computer system is to run checks to find matches between vendor and employee addresses. This method is effective because fictitious vendors often have addresses that match those of employees creating them. This kind of analysis targets the direct linkage between fraudulent activities and internal entities, which is a common red flag in vendor fraud scenarios.

Association of Certified Fraud Examiners (ACFE) - Techniques for Fraud Detection

The most appropriate statement for a Chief Audit Executive to include in the internal audit policy manual to promote objectivity is that internal auditors should limit the scope of an engagement if they become aware of a potential impairment of their objectivity in order to reduce the potential impact of the impairment on the engagement results. This guidance helps to manage and mitigate any risks to objectivity that might affect the integrity of audit findings.

The IIA’s standards and guidelines on objectivity and conflicts of interest, particularly those addressing how to handle and document potential impairments to objectivity.

The most effective way for an organization to ensure proper governance over its internal controls is by adopting the COSO (Committee of Sponsoring Organizations of the Treadway Commission) internal control framework. The COSO framework is widely recognized and provides a comprehensive structure for designing, implementing, and conducting internal control and assessing its effectiveness. It helps organizations to achieve their objectives in operations, reporting, and compliance by addressing components such as control environment, risk assessment, control activities, information and communication, and monitoring activities. References: The IIA’s International Standards for the Professional Practice of Internal Auditing (Standards), specifically Standard 2100 - Nature of Work, and COSO’s Internal Control - Integrated Framework.