CIA Governance & Corporate Structure

Question 1

According to the IIA Standards, the Chief Audit Executive (CAE) should report functionally to which body to ensure organizational independence?

Accepted Answer

The Board or Audit Committee

Answer

The IIA Standards require the CAE to have functional reporting to the board or audit committee to maintain independence from management.

Question 2

The Three Lines of Defense model assigns internal audit to which line?

Accepted Answer

Third line

Answer

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.

Question 3

Which committee of the board of directors bears primary responsibility for overseeing the internal audit function?

Accepted Answer

Audit Committee

Answer

The audit committee has primary board-level responsibility for overseeing financial reporting, internal controls, and the internal audit function.

Question 4

Under the Sarbanes-Oxley Act Section 301, audit committee members must be:

Accepted Answer

Independent directors with no material relationship to the company

Answer

SOX Section 301 requires audit committee members to be independent directors, meaning they cannot accept consulting fees or be affiliated persons of the company.

Question 5

An internal audit charter must be approved by:

Accepted Answer

The Board or its delegated audit committee

Answer

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.

CIA - Certified Internal Accountant Practice Test

CIA - Certified Internal Accountant Practice Test

CIA Governance & Corporate Structure