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Section 1
Describe the Purpose of Internal Auditing according to the Global Internal Audit Standards
Preview
Preview: Part 1A. Foundations of Internal Auditing (35% of Part 1)
Preview includes- 3 of 3 lesson topics
- 1 overview segment
- 3 core concepts
- 2 exam tips
Lesson Topics
- Purpose of Internal Auditing
- Value Creation, Protection, and Sustainability
- Conditions for an Effective Internal Audit Function
Overview
This objective covers describe the purpose and effectiveness of internal auditing under Part 1A. Foundations of Internal Auditing (35% of Part 1). It is tested as an application objective: candidates must recognize the governing principle and then choose the action that best preserves risk-based, independent, and evidence-supported internal auditing.
Core Concepts
- Internal auditing strengthens the organization’s ability to create, protect, and sustain value by providing the board and management with independent, risk-based, objective assurance, advice, insight, and foresight.
- Internal audit evaluates and contributes to improvement of governance, risk management, and control processes using a systematic, disciplined approach.
- An effective function is appropriately positioned, independently accountable to the board, led by a competent CAE, sufficiently resourced, supported by unrestricted access, and staffed by objective and competent professionals.
Exam Tips
- Anchor Part 1 answers in value, risk, governance, control, independence, and objectivity.
- Reject answers that make internal audit a control owner or operational decision-maker.
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Section 2
Explain the internal audit mandate and responsibilities of the board and chief audit executive
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Section 3
Recognize the requirements of an internal audit charter
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Section 4
Interpret the differences between assurance services and advisory services provided by the internal audit function
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Section 5
Describe the types of assurance services performed by the internal audit function
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Section 6
Describe the types of advisory services performed by the internal audit function
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Section 7
Identify situations where the independence of the internal audit function may be impaired
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Section 8
Recognize the internal audit function's role in the organization's risk management process
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Section 9
Demonstrate integrity
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Section 10
Assess whether an individual internal auditor has any impairments to objectivity
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Section 11
Analyze policies that promote objectivity and potential options to mitigate impairments
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Section 12
Apply the knowledge, skills, and competencies required (whether developed or procured) to fulfill the responsibilities of the internal audit function
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Section 13
Demonstrate due professional care
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Section 14
Maintain confidentiality and use information appropriately during engagements
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Section 15
Describe the concept of organizational governance
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Section 16
Recognize the impact of organizational culture on the overall control environment and individual engagement risks and controls
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Section 17
Recognize ethical and compliance-related issues
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Section 18
Interpret fundamental concepts of risk type
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Section 19
Interpret fundamental concepts of the risk management process
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Section 20
Describe risk management within organizational processes and functions
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Section 21
Interpret internal control concepts and types of controls
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Section 22
Recognize the importance of the design, effectiveness, and efficiency of internal controls (financial and nonfinancial)
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Section 23
Describe concepts of fraud risks and types of fraud
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Section 24
Determine whether fraud risks require special consideration during an engagement
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Section 25
Evaluate the potential for fraud and how the organization detects and manages fraud risks
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Section 26
Describe controls to prevent and detect fraud
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Section 27
Recognize techniques and the internal audit function's role related to fraud investigation
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Section 28
Determine engagement objectives and scope
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Section 29
Determine evaluation criteria based on relevant information gathered
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Section 30
Plan the engagement to assess key risks and controls
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Section 31
Determine the appropriate approach for an engagement
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Section 32
Complete a detailed risk assessment of each activity under review
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Section 33
Determine engagement procedures and prepare the engagement work program
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Section 34
Determine the level of resources and skills needed for the engagement
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Section 35
Identify sources of information to support engagement objectives and procedures
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Section 36
Evaluate the relevance, sufficiency, and reliability of evidence gathered to support engagement objectives
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Section 37
Evaluate technology options that internal auditors may use to develop and support engagement findings and conclusions
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Section 38
Apply appropriate analytical approaches and process mapping techniques
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Section 39
Apply analytical review techniques
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Section 40
Determine whether there is a difference between evaluation criteria and existing conditions and evaluate the significance of each finding
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Section 41
Prepare workpapers, including relevant information to support conclusions and engagement results
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Section 42
Summarize and develop engagement conclusions
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Section 43
Apply appropriate supervision throughout the engagement
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Section 44
Apply appropriate communication with stakeholders throughout the engagement
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Section 45
Describe methodologies for the planning, organizing, directing, and monitoring of internal audit operations
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Section 46
Describe key activities for managing financial, human, and IT resources within the internal audit function
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Section 47
Describe the key elements required to align internal audit strategy to stakeholder expectations
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Section 48
Recognize the chief audit executive's responsibilities for building relationships and communicating with senior management and the board about various matters
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Section 49
Identify sources of potential engagements
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Section 50
Describe the processes to develop a risk-based audit plan
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Section 51
Recognize the importance for internal auditors to coordinate with other assurance providers and leverage their work
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Section 52
Describe the required elements of the quality assurance and improvement program
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Section 53
Identify appropriate disclosure of nonconformance with The IIA's Global Internal Audit Standards
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Section 54
Recognize practical methods for establishing internal audit key performance indicators or scorecard metrics that the chief audit executive communicates to senior management and the board
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Section 55
Recognize attributes of effective engagement results communication
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Section 56
Demonstrate effective communication of engagement results
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Section 57
Determine whether to develop recommendations, request action plans from management, or collaborate with management to agree on actions
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Section 58
Describe the engagement closing communication and reporting process
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Section 59
Describe the chief audit executive's responsibility for assessing residual risk for the engagement
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Section 60
Describe the process for communicating risk acceptance (when management has accepted a level of risk that may be unacceptable to the organization)
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Section 61
Describe the process for monitoring and confirming the implementation of management action plans
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Section 62
Describe the escalation process if management has not adequately implemented an action plan
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