Curious about Actual IIA Certified Internal Auditor (IIA-IAP) Exam Questions?

Correct : B

Comprehensive and Detailed Step-by-Step Explanation:

Reference to IIA Standards:

Standard 2130 - Control: Internal auditors must assess both the adequacy of control design and the effectiveness of control operation.

Reasoning:

Option B is correct because a poorly designed control, even if operating effectively, cannot achieve its objective due to inherent flaws in its structure or implementation.

Option A incorrectly suggests that operational testing overrides design inadequacies. Evaluating control design is essential before assessing operational effectiveness.

Option C is incorrect because reliance on secondary controls to mitigate risk does not compensate for an inadequate primary control design.

Control Design Importance:

Adequate design ensures that controls are appropriately structured to address specific risks, providing a strong foundation for effective operation.

Correct : C

Comprehensive and Detailed Step-by-Step Explanation:

Reference to IIA Standards:

Standard 2210 - Engagement Objectives: Audit objectives must align with the engagement scope and focus on evaluating compliance, efficiency, and effectiveness.

Reasoning:

Option C is correct because assessing compliance with HR policies is a specific, measurable, and relevant objective aligned with internal audit's role in evaluating governance and control processes.

Option A (analyzing turnover rates) is more investigative and does not align with assessing processes or compliance.

Option B (evaluating common practices) is vague and lacks a clear link to controls, policies, or risks.

Impact of Clear Objectives:

Well-defined objectives, like compliance assessment, ensure the audit delivers actionable insights and adds value to the organization.

Correct : B

Comprehensive and Detailed Step-by-Step Explanation:

Inherent Risk: This is the risk that exists in an environment or process before any actions or controls are applied to mitigate it. It reflects the natural vulnerability of the process to errors or misstatements.

Residual Risk: This is the risk that remains after controls or mitigation strategies have been applied. It reflects the organization's risk exposure post-control implementation.

Control Risk: This relates to the risk that controls designed to prevent or detect errors may not operate effectively.

Thus, the correct answer is B. Inherent Risk since the question specifies the absence of any actions to control or modify the circumstances.

Correct : A

Comprehensive and Detailed Step-by-Step Explanation:

Planning Phase: According to the International Standards for the Professional Practice of Internal Auditing (ISPPIA), Standard 2200 (Engagement Planning), the internal auditor must establish the engagement's objectives, scope, and criteria during the planning phase. This ensures that the audit is focused and aligned with organizational objectives and stakeholder expectations.

Performance Phase: During this phase, auditors execute the planned activities, but the scope and objectives are typically fixed unless there are significant changes in circumstances.

Final Engagement Report: The final report documents the outcomes of the audit, not the scope or objectives, which are pre-determined.

IIA Standard 2200: Engagement Planning.

IIA Standard 2210: Engagement Objectives.

IIA Implementation Guides on Engagement Planning emphasize determining the scope and objectives early to provide direction and clarity.

Thus, the correct answer is A. During the planning of the engagement.

Correct : A

Comprehensive and Detailed Step-by-Step Explanation:

Competency Principle: According to the IIA Code of Ethics, internal auditors must apply the knowledge, skills, and experience needed to perform their duties effectively.

Key Characteristics: Continuous improvement in proficiency, quality of services, and effectiveness directly align with the principle of competency.

Other Options:

Option B: Describes the principle of confidentiality, which emphasizes the responsible use and protection of sensitive information.

Option C: Reflects the principle of integrity, which focuses on avoiding conflicts of interest or situations impairing professional judgment.

Thus, the correct answer is A.