Newly Released IIA IIA-CIA-Part1 Exam PDF

Outsourcing the server and data center management function transfers or shares defined elements of operational risk with an external service provider through contractual arrangements. The organization remains accountable for overseeing the outsourced activity, but the provider assumes responsibility for performing specified services and managing associated risks. Option A represents risk avoidance because management stops the activity that creates the exposure. Selling the foreign business unit in option C also removes exposure by exiting the activity and is therefore closer to avoidance. Option D is risk reduction because lower authorization limits are an internal control intended to reduce the magnitude or probability of inappropriate international transactions. Because outsourcing allocates responsibility for performing the activity and managing aspects of its risk to another party, option B best represents risk transfer or sharing.

If the assignment is a consulting engagement, the best action for the new internal auditor, who recently transferred from being an accounts payable clerk, is to decline the assignment and ask to be reassigned. This avoids any conflict of interest and maintains objectivity, as the auditor would be evaluating processes for which they were previously responsible, potentially compromising the independence and objectivity required in consulting engagements.

IIA Standards 1120 - Objectivity

Skimming is the type of fraud that involves an employee accepting cash payments and failing to record the sales, thereby diverting the cash for personal use. This kind of fraud occurs before the transaction is recorded in the accounting records, making it particularly stealthy since it does not directly affect the accounting system.

Fraud classification and types in internal audit literature

According to the IIA ' s standards, a chief audit executive (CAE) can report that the internal audit activity conforms with the Standards if external assessments are performed at least once every five years and supported by ongoing internal assessments. In this scenario, the most recent external and internal assessments confirm conformance, which allows the CAE to report conformance with the Standards.

The IIA ' s International Standards for the Professional Practice of Internal Auditing, particularly the standards related to quality assurance and improvement programs.