CIA Aptitude Test flashcards
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32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Internal auditing definition
- An independent, objective assurance and consulting activity that adds value and improves operations by evaluating and improving risk management, control, and governance processes.
- Audit charter
- A formal document approved by the board that defines the internal audit activity's purpose, authority, and responsibility, and is reviewed periodically.
- Assurance vs consulting
- Assurance is an objective examination of evidence for independent assessment; consulting is advisory work with nature and scope agreed with the client.
- Functional reporting line
- The CAE reports functionally to the board for charter approval, audit plan approval, and performance evaluation, supporting organizational independence.
- Objectivity
- An unbiased mental attitude that allows internal auditors to perform engagements without compromising quality or yielding to conflicting interests.
- Independence impairment
- A condition that threatens the IAA's ability to work without bias; it must be disclosed to the board with its effect and safeguards.
- Due professional care
- The care and skill expected of a reasonably prudent and competent internal auditor, considering cost, materiality, and risk of error or fraud.
- Proficiency
- The IAA collectively must possess or obtain the knowledge, skills, and competencies needed to perform its responsibilities effectively.
- Continuing professional education
- Ongoing development required for internal auditors; a common benchmark is at least 40 hours per year, with a portion related to the profession.
- QAIP
- A quality assurance and improvement program covering all aspects of the IAA, including internal and external assessments, to provide reasonable assurance of conformance.
- External assessment
- An assessment conducted at least once every five years by a qualified, independent assessor or team from outside the organization.
- Self-assessment with independent validation
- An external assessment option where the IAA performs a self-assessment that is validated by an independent, qualified reviewer.
- Governance definition
- The combination of processes and structures implemented by the board to inform, direct, manage, and monitor the organization's activities toward its objectives.
- Three lines model
- First line owns and manages risk; second line provides oversight and guidance; third line, internal audit, provides independent assurance to the board.
- Control definition
- Any action taken by management to enhance the likelihood that objectives are achieved, including preventive, detective, and corrective controls.
- Fraud triangle
- A model describing three conditions that lead to fraud: pressure or incentive, opportunity, and rationalization by the individual.
- Fraud risk management
- The organization's process for identifying, assessing, and mitigating fraud risk; internal audit evaluates its adequacy and effectiveness.
- Fraud red flags
- Indicators of possible fraud, such as unusual journal entries, segregation-of-duties gaps, lifestyle changes, and management override of controls.
- Engagement work program
- A document listing the procedures to be performed during an engagement; it must be approved before work begins and updated with approval.
- Supervision
- Directing, reviewing, and approving the work of engagement staff to ensure it is performed as planned and properly documented.
- Materiality
- The significance of a matter that could affect the decisions of users; it guides the extent of testing and reporting.
- Sufficient evidence
- Evidence that is factual, adequate, and convincing so that a prudent, informed person would reach the same conclusions as the auditor.
- Analytical procedures
- Comparisons of financial and nonfinancial data to expectations; significant variances require follow-up and documentation.
- Workpaper ownership
- Workpapers are the property of the organization, not the auditor, and must be complete, accurate, and support the conclusions reached.
- Engagement communication
- Reporting that is accurate, objective, clear, concise, constructive, complete, and timely, covering objectives, scope, results, and conclusions.
- Finding elements
- A finding states the criteria, condition, cause, and effect or risk, and supports the recommendation and management action plan.
- Follow-up procedures
- Monitoring that verifies management actions have been implemented and are effective; unresolved issues are escalated to the board.
- Business acumen
- Understanding the organization's strategy, operating environment, industry, and key performance drivers to assess risk and control effectively.
- Tone at the top
- The organization's culture and ethical climate set by leadership, which shapes the control environment and risk behavior.
- Stakeholder management
- Identifying key stakeholders, understanding their expectations, and communicating effectively to support audit objectives and outcomes.
- Change management
- The process of planning and controlling organizational change; auditors evaluate whether changes are properly authorized and communicated.
- Risk appetite
- The amount and type of risk an organization is willing to accept in pursuit of its objectives, used to guide control and audit decisions.