CIA Governance & Corporate Structure 2

Question 1

The concept of 'tone at the top' in corporate governance refers to:

Accepted Answer

The ethical climate and commitment to integrity demonstrated by senior leadership

Answer

Tone at the top describes the ethical atmosphere that senior executives and the board create, which permeates the organization and influences employee behavior.

Question 2

According to IIA Standards, organizational independence for the internal audit function is achieved when the CAE reports to a level that allows the function to:

Accepted Answer

Fulfill its responsibilities without interference

Answer

Organizational independence requires the CAE to report to a sufficiently high level in the organization so the internal audit activity can fulfill its responsibilities free from undue influence.

Question 3

Which of the following best describes dual reporting for the Chief Audit Executive?

Accepted Answer

The CAE has administrative reporting to management and functional reporting to the board/audit committee

Answer

Dual reporting means the CAE reports administratively to management (e.g., the CEO) for day-to-day operations while reporting functionally to the board or audit committee for independence and oversight.

Question 4

The audit committee's oversight responsibilities typically include all of the following EXCEPT:

Accepted Answer

Setting executive compensation packages

Answer

Setting executive compensation is the responsibility of the compensation committee, not the audit committee, which focuses on financial reporting, controls, and audit oversight.

Question 5

Under the IIA's International Professional Practices Framework (IPPF), which document establishes the purpose, authority, and responsibility of the internal audit activity?

Accepted Answer

The internal audit charter

Answer

The internal audit charter is the formal document that establishes the internal audit activity's purpose, authority, and responsibility, and must be consistent with the IIA's Definition of Internal Auditing and Core Principles.

CIA - Certified Internal Accountant Practice Test

CIA - Certified Internal Accountant Practice Test

CIA Governance & Corporate Structure 2