CIA Governance & Corporate Structure 3

Question 1

The IIA's Core Principles for the Professional Practice of Internal Auditing require that internal auditors demonstrate which quality to maintain their governance role?

Accepted Answer

Objectivity

Answer

Profitability focus

Answer

Executive authority

Answer

Technical specialization only

Question 2

In a well-designed corporate governance structure, which of the following relationships best reflects sound practice?

Accepted Answer

The audit committee provides independent oversight of both internal and external auditors

Answer

The internal audit function reports solely to the CFO

Answer

The external auditor sets the internal audit agenda

Answer

Management selects and dismisses the external auditor without board involvement

Question 3

The King IV Report on Corporate Governance (South Africa) introduced the concept of 'integrated thinking,' which means:

Accepted Answer

Considering the interconnectedness of capital resources and their impact on value creation over time

Answer

Combining financial and tax reporting into a single document

Answer

Merging the roles of CEO and Chairman for efficiency

Answer

Integrating internal and external audit teams

Question 4

Which of the following situations would most likely impair the independence of the internal audit activity?

Accepted Answer

The CAE also serves as the Chief Risk Officer on a permanent basis

Answer

The CAE attends audit committee meetings

Answer

Internal audit reviews the same processes every three years

Answer

Internal audit uses a risk-based audit plan

Question 5

A company's code of conduct is primarily a governance tool that serves to:

Accepted Answer

Communicate expected ethical standards and behavioral guidelines to all employees

Answer

Replace the need for internal audit oversight

Answer

Satisfy tax reporting requirements to the IRS

Answer

Document the external auditor's responsibilities

Question 6

Under Sarbanes-Oxley Section 302, senior executives (CEO and CFO) are required to:

Accepted Answer

Certify the accuracy of financial reports and the effectiveness of disclosure controls

Answer

Personally conduct the annual external audit

Answer

Approve all internal audit findings before publication

Answer

Appoint all members of the audit committee

Question 7

The concept of 'stewardship' in corporate governance refers to:

Accepted Answer

Management's responsibility to protect and grow assets on behalf of the organization's owners and stakeholders

Answer

The process of auditing third-party vendors

Answer

The external auditor's duty to detect all fraud

Answer

The board's authority to set employee salaries