Governance & Corporate Structure Flashcards
7 cards from real CIA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Governance & Corporate Structure flashcards as text
According to the IIA Standards, the Chief Audit Executive (CAE) should report functionally to which body to ensure organizational independence?
Answer: The Board or Audit Committee
The IIA Standards require the CAE to have functional reporting to the board or audit committee to maintain independence from management.
The Three Lines of Defense model assigns internal audit to which line?
Answer: Third line
Internal audit is the third line of defense, providing independent assurance over the effectiveness of risk management and controls established by the first and second lines.
Which committee of the board of directors bears primary responsibility for overseeing the internal audit function?
Answer: Audit Committee
The audit committee has primary board-level responsibility for overseeing financial reporting, internal controls, and the internal audit function.
Under the Sarbanes-Oxley Act Section 301, audit committee members must be:
Answer: Independent directors with no material relationship to the company
SOX Section 301 requires audit committee members to be independent directors, meaning they cannot accept consulting fees or be affiliated persons of the company.
An internal audit charter must be approved by:
Answer: The Board or its delegated audit committee
Per IIA Standard 1000, the internal audit charter must be approved by the board or its delegated audit committee to establish the function's authority and independence.
Corporate governance is best described as:
Answer: The system of rules, practices, and processes by which a company is directed and controlled
Corporate governance is the system of rules, practices, and processes by which a company is directed and controlled, balancing the interests of stakeholders.
Which COSO component focuses on the attitudes and actions of leadership that set the ethical tone for an organization?
Answer: Control Environment
The Control Environment is the COSO component that reflects 'tone at the top' — the integrity, ethical values, and management philosophy that establish the foundation for internal control.