CIA IIA-CIA-Part1 IIA Study Notes

Residual risk is the remaining risk after management has implemented risk responses. The auditor is assessing what could still go wrong despite the effectiveness of the risk management technique in place, which is evaluating the remaining exposure to risk. References:

IIA Standard 2120: Risk Management.

COSO Enterprise Risk Management Framework.

The most effective way to detect fraudulent claims for personal travel as business expenses is by reconciling claims against the business requests approved by supervisors. This method helps to verify that each claim corresponds directly to an approved and legitimate business activity, which is a critical checkpoint in detecting fraud in travel expenses.References: Institute of Internal Auditors (IIA) Standards and Guidelines.

When developing performance standards to measure an organization's risk management process, internal audit may use the key principles approach. This approach involves identifying and applying fundamental principles that underpin effective risk management practices. These principles provide a benchmark against which the organization's risk management process can be assessed, ensuring that the process aligns with best practices and contributes to achieving organizational objectives.

References:

IIA Practice Guide: Assessing the Adequacy of Risk Management Using ISO 31000

COSO Enterprise Risk Management Framework

Independence is a fundamental principle for internal auditing, ensuring that internal auditors are free from conditions that threaten their ability to carry out their responsibilities in an unbiased manner. Scenario B presents a clear impairment to independence because management's reduction of the internal audit budget, leading to the removal of all IT-related engagements from the audit plan, could limit the internal audit activity's ability to objectively assess areas critical to the organization’s risk profile. This type of management interference compromises the scope and depth of internal audit activities, impacting their ability to provide an unbiased assurance.

References:

IIA Standard 1100: Independence and Objectivity

IIA Standard 1110: Organizational Independence