Last Attempt IIA-CIA-Part1 Questions

Due professional care was applied by the internal auditor. According to IIA guidance, due professional care involves applying reasonable judgment in all audit circumstances. The auditor’s decision to extend the scope of testing based on a fraud risk assessment, even though no issues were initially found, represents a judicious use of professional judgment given the potential risk of fraud. The fact that fraud was later discovered does not necessarily imply a lack of professional care, as audits cannot guarantee the detection of all frauds.

IIA Standard 1220 - Due Professional Care

An evaluation of the current performance and compensation program would be the most effective control to address the underlying cause of fraudulent behavior described. The pressures from unrealistic targets and aggressive monitoring likely encouraged employees to engage in fraudulent account openings. By evaluating and potentially revising these targets and the associated compensation schemes, the bank could mitigate the pressures that lead to such unethical behaviors.

Standards on the role of internal control systems in preventing and detecting fraud, including guidance on managing performance and compensation to align with ethical standards.

When communicating the results of the quality assurance and improvement program (QAIP) to senior management and the board, the chief audit executive (CAE) must include disclosures on the " Scope and frequency of both the internal and external assessments. " This information provides stakeholders with insight into the comprehensiveness and timing of the QAIP evaluations, ensuring transparency and accountability in the internal audit function’s efforts to maintain or improve quality and effectiveness.

IIA Standard 1312 - External Assessments

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Appropriate disclosure of nonconformance with the Standards is demonstrated when the chief audit executive (CAE) discusses with the board issues regarding the internal audit activity performing an IT engagement without proper skills and knowledge. This direct communication with the board about significant issues affecting the internal audit function’s ability to conform to professional standards is crucial for ensuring accountability and transparency.

IIA Standards on communication and disclosure of nonconformance.