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us
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Special Credit for Contribution

I am grateful to Ms. Maha Zahid for being the Co-Author in this book.
Special thanks to Mr. Abdullah Yousaf and Ms. Hira Muhammad for their
sincere efforts in making this book a reality.

Let’s Connect With Each Other

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INDEX
Main Cover…………………………………………………………………………………………………..1
Special Credit for Contribution………………………………………………………………………2
Preface……………………………………………………………………………………………………..…6
A Gentle Reminder from the Heart………………………………………………………………..8
Certified Internal Auditor (CIA) Exam Guide……………………………………….………..11
Letter from Muhammad Zain……………………………………………………………………...29

Section A – Internal Audit Operations – Key Learning Outcomes…………………..32

Section A – Internal Audit Operations – Study Points……………………………………36
Section A – Internal Audit Operations – True False Questions……………………….95
Section A – Internal Audit Operations – Fill in the Blanks……………………………108
Section A – Internal Audit Operations – Fill in the Blanks – Answer
Key……………………………………………………………………………………………….………....113
Section A – Internal Audit Operations – One Word Answer
Questions…………………………………………………………………………………………………115
Section A – Internal Audit Operations – One Word Answer Questions – Answer
Key……………………………………………………………………………………………………..…..120
Section A – Internal Audit Operations – Matching Questions………………………122
Section A – Internal Audit Operations – Mind Maps…………………………………...162

Section B – Internal Audit Plan – Key Learning Outcomes…………………….……..174

Section B – Internal Audit Plan – Study Points……………………………….……..……176
Section B – Internal Audit Plan – True False Questions…………………………...….214
Section B – Internal Audit Plan – Fill in the Blanks……………………………….….…221
Section B – Internal Audit Plan – Fill in the Blanks – Answer Key……………..…224
Section B – Internal Audit Plan – One Word Answer Questions……………...……225
Section B – Internal Audit Plan – One Word Answer Questions – Answer
Key………………………………………………………………………………………………………....227
Section B – Internal Audit Plan – Matching Questions………………….…………….228
Section B – Internal Audit Plan – Mind Maps……………………………………….…....252

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Section C – Quality of the Internal Audit Function – Key Learning

Outcomes………………………………………………………………………………………………..260
Section C – Quality of the Internal Audit Function – Study Points……………..…262
Section C – Quality of the Internal Audit Function – True False
Questions……………………………………………………………………………………………..…284
Section C – Quality of the Internal Audit Function – Fill in the Blanks……….…291
Section C – Quality of the Internal Audit Function – Fill in the Blanks – Answer
Key…………………………………………………………………………………………………….……294
Section C – Quality of the Internal Audit Function – One Word Answer
Questions…………………………………………………………………………………………………295
Section C – Quality of the Internal Audit Function – One Word Answer Questions
– Answer Key……………………………………………………………………………………..…...297
Section C – Quality of the Internal Audit Function – Matching
Questions…………………………………………………………………………………….………….298
Section C – Quality of the Internal Audit Function – Mind
Maps……………………………………………………………………………………………………….320

Section D – Engagement Results and Monitoring – Key Learning

Outcomes……………………………………………………………………………………………..…325
Section D – Engagement Results and Monitoring – Study
Points………………………………………………………………………….………………………..…329
Section D – Engagement Results and Monitoring – True False
Questions…………………………………………………………………………………………..…...382
Section D – Engagement Results and Monitoring – Fill in the
Blanks…………………………………………………………………………………….………….……394
Section D – Engagement Results and Monitoring – Fill in the Blanks – Answer
Key…………………………………………………………………………………………………..…..…399
Section D – Engagement Results and Monitoring – One Word Answer
Questions………………………………………………………………………………………………..401
Section D – Engagement Results and Monitoring – One Word Answer Questions
– Answer
Key………………………………………………………………………………………………………….405
Section D – Engagement Results and Monitoring – Matching
Questions………………………………………………………………………………….…..………..407
Section D – Engagement Results and Monitoring – Mind
Maps……………………………………………………………………………………………………….451
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About the Author…………………………………………………………………………………...459

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PREFACE
Every thread of knowledge woven into the tapestry of my understanding is a
divine gift from the Supreme Architect, the Almighty Allah. It is His infinite
mercy and blessing that empowered me to conquer the daunting peaks of
the Certified Public Accountant (CPA), Certified Management Accountant
(CMA), Certified Internal Auditor (CIA), and Masters of Business
Administration (MBA) exams in my maiden attempt.
My heart thrums with gratitude as I recall the unceasing support of my
family. Their enduring sacrifices – the surrendering of resources and time –
have fueled my growth in all dimensions: moral, physical, and spiritual. I
extend a profound token of thanks to my mentors, whose wisdom,
experience, and teachings have sculpted me into the person I am today.
This book reflects the symphony of wisdom bestowed upon me by Allah, in
conjunction with the tapestry of experiences and learnings acquired over a
lifetime. My thirst for knowledge has led me on countless quests, diving into
the endless seas of information found on the Internet, Blogs, Social Media,
and Wikipedia. To all the scribes and curators of Google, Blogs, Social
Media, and Wikipedia, I owe a debt of gratitude for feeding my insatiable
curiosity and illuminating my path with their wisdom.
Yet, as I delved deeper, a profound realization dawned upon me: our human
understanding is but a mere droplet in the boundless ocean of knowledge
yet to be explored and discovered. This very human curiosity sparks a
cascade of innovations, discoveries, and ideas, nudging us ever so slightly
closer to the vast unknown.
In the grand scheme of this infinite wisdom, if my words happen to echo any
copyrighted material, I assure you it is nothing but a coincidence. Any
perceived resemblance is unintentional, a serendipitous concurrence of
thoughts and ideas.
I warmly welcome you, dear readers, to freely explore this book for your
personal growth and enlightenment, devoid of any time or device
constraints. To make this treasure trove of knowledge accessible to all, I have
consciously kept the price minimal, thereby encouraging genuine
engagement with the material.

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I strive for accuracy and integrity in every word that this book carries, yet I
am aware of the fallibility of human knowledge. If you stumble upon any
discrepancies or inaccuracies, I graciously invite your critique and
correction for future updates.
In the spirit of learning and wisdom, I implore our Lord, the Supreme
Master and Judge, to bless us with greater understanding and wisdom in
this world, and eternal grace in the Life Hereafter. Ameen.

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A Gentle Reminder from the Heart

Dear Reader,

This book you hold is not merely a compilation of words and knowledge—it
is a labor of love, a reflection of tireless devotion, and a gift of insight shaped
through countless hours of discipline, reflection, and sincere effort. Every
line, every concept, every question is woven with care, intending to serve
your journey toward excellence and success.

As you benefit from its content, we humbly request you to uphold the sacred
values of integrity, professionalism, and gratitude. Sharing or
distributing this material without permission may seem like an act of
generosity, but in truth, it silently erodes the foundation upon which future
knowledge is built. It discourages creation, disrespects the creator's effort,
and—most importantly—plants the seed of unethical practice.

Remember, helping someone through unlawful means may seem noble on

the surface, but it teaches them to seek shortcuts, to rely on what is not
rightfully earned, and to repeat the same act with others. This cycle not only
harms the creator—it subtly harms the learner too.

Let us instead be among those who protect, honor, and uplift the
knowledge we receive. By respecting the rights of authors and educators, you
become a partner in their mission and a light-bearer in your own path of
learning.

May God bless your intentions, guide your actions, and grant you success in
both this world and the Hereafter.

Ameen.

With heartfelt gratitude,

Zain Academy

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CERTIFIED INTERNAL AUDITOR (CIA) EXAM GUIDE

WHY BECOME A CIA
The Certified Internal Auditor (CIA) certification offers many benefits. No
matter where you are in your career, there are many ways the CIA
certification can help you move forward.
Becoming certified will
• Unlock career opportunities
• Demonstrate your expertise
• Increase earning potential
• Build confidence
• Improve knowledge and skills
• Earn the respect of peers

THE INSTITUTE OF INTERNAL AUDITORS (IIA)

The Institute of Internal Auditors (IIA) is an international professional
association that was organized in 1941 to serve and develop the internal
audit community. It holds conferences; provides continuing professional
education courses; publishes newsletters, books, and magazines; and offers
several professional certifications, of which the CIA is most in demand. The
IIA acts as the voice of the internal audit profession.

THE PROFESSION
The CIA is the only globally recognized certification in the internal audit and
compliance industry. According to the IIA, by earning it, “individuals
demonstrate their professionalism in the internal audit field,” and will have
gained “educational experience, information, and business tools that can be
applied immediately in any organization or business environment.”
The IIA publishes the major guidance for the profession, including The
International Professional Practices Framework (IPPF) and the Global
Internal Audit Standards.

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MEMBERSHIP
Membership with The IIA isn’t required to become a CIA, but we
recommend it because it provides many benefits.
Chapters and affiliated institutes around the world hold regular meetings,
seminars, and conferences that encourage members to network with peers,
develop professional contacts, and stay informed about current issues and
practices in internal auditing.
Local institutes charge their own membership fees. Contact your local
institute directly to obtain specific information.

THE IIA REQUIREMENTS TO BECOME CERTIFIED

Auditors must meet requirements known collectively as the four Es
(Education, Ethics, Examinations, and Experience) in order to become a
Certified Internal Auditor. Once your application to the CIA program is
approved, you have 3 years to complete the program requirements.
However, you can apply for a program eligibility or hardship extension. Each
extension has its own duration, procedures, and fees.

a. Education
• Master’s degree or equivalent; or
• Bachelor’s degree or equivalent; or
• Active Internal Audit Practitioner designation holder; or
• Equivalent experience – i.e. candidates without any of the above
education levels may be approved into the CIA program if they already
have five years of internal audit experience.

Note for Students – Students can apply and sit for the exam before they meet
the education requirement. However, the education requirements must be
met within 3 years of applying.

b. Ethics
Agree to abide by The IIA’s standards of ethics and professionalism and
continually exhibit high moral and professional character.

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c. Examinations
Pass all three parts of the CIA exam. This is the requirement candidates
spend the most time concerned about. But don’t worry! We offer step by
step advice that will set you up for exam success.

d. Experience
The required amount of internal audit experience (or equivalent) depends
on your educational background.
• Master’s degree or equivalent – 1 year
• Bachelor’s degree or equivalent – 2 years
• Active Internal Audit Practitioner designation holder – 5 years

THE CIA EXAM

The CIA exam is created by The IIA’s Professional Certification Department,
which is comprised of the Professional Certifications Board (PCB) and the
Exam Development Committee (EDC), to reflect current knowledge and
practices in the internal auditing profession.
Together, these entities write the syllabus and questions, grade the exams,
and ensure the integrity of the exam process by maintaining its non-
disclosed status. The EDC is not affiliated with any review course provider.
All review courses, including Zain, have access to the same IIA syllabus that
the EDC makes publicly available.
The CIA exam focuses on internal audit topics, such as internal controls and
risk management, auditing processes, control frameworks, fraud,
documentation standards, engagement planning and procedures, IT and
security systems, governance and business controls, and regulatory issues.

CIA EXAM STRUCTURE AND CONTENT

The total exam is 6.5 hours of testing (2.5 hours for Part 1 and 2 hours each
for Parts 2 and 3), plus 5 minutes per part for a survey. Each of the three
exam parts tests candidates on a few different content areas, called
“sections.” Each of these sections is further broken down according to the
syllabus released by the IIA.

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IIA RELEASED QUESTIONS

Test questions are released to review course providers and the general public
when they are retired (i.e., no longer used on the exam). Actual CIA exam
questions and other exam content remains non-disclosed and is not
available to anyone, not even The IIA at large.
Review providers rely on the publicly available exam syllabus, the IPPF,
retired CIA exam questions, and their knowledge of the trends currently
developing in the field to equip candidates to pass the exam. At Zain, we rely
on our staff of professional auditors, accountants, and editors (which
includes CIAs, CPAs, and CMAs), as well as contributions from professors at
prestigious universities to ensure our review materials are of the highest
quality.

CIA PART 1 – INTERNAL AUDIT FUNDAMENTALS

a. Section A – Foundations of Internal Auditing – 35% weightage
b. Section B – Ethics and Professionalism – 20% weightage
c. Section C – Governance, Risk Management and Control – 30%
weightage
d. Section D – Fraud Risks – 15% weightage

CIA PART 2 – INTERNAL AUDIT ENGAGEMENT

a. Section A – Engagement Planning – 50% weightage
b. Section B – Information Gathering, Analysis and Evaluation – 40%
weightage
c. Section C – Engagement Supervision and Communication – 10%
weightage

CIA PART 3 – INTERNAL AUDIT OPERATIONS

a. Section A – Internal Audit Operations – 25% weightage
b. Section B – Internal Audit Plan – 15% weightage
c. Section C – Quality of the Internal Audit Function – 15% weightage
d. Section D – Engagement Results and Monitoring – 45% weightage

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HOW THE CIA EXAM IS SCORED

The exam is computer-graded. You’ll receive a printed unofficial score report
before you leave the testing center, so you’ll know right away whether you’ve
passed. Scores are determined by converting the value of questions
answered correctly to a scale that ranges from 250 to 750. The IIA has set
the scaled passing score at 600, which corresponds to the minimum level of
knowledge deemed acceptable for new CIAs.

HOW TO APPLY FOR THE CIA EXAM

The CIA exam is offered year-round with no blackout dates, so you can take
it as soon as you’re prepared, whenever is convenient. There are four things
you must do before you can sit for an exam part.

a. Create a profile in the IIA’s Certification Candidate

Management System (CCMS)
Go to The IIA’s website and create an account. You do not need to become a
member, but you should consider it before applying for the CIA Certification
Program.
With your IIA account, go to CCMS on The IIA’s website and create your
profile. The IIA will send you a Candidate ID number and information on
how to activate your account.

b. Apply for the CIA Certification Program

Upload the required documents for program approval.
• Proof of Identity – The IIA will accept a copy of your government-
issued driver’s license, passport, military ID, alien registration card,
or government-issued local language ID.

• Proof of Education – The IIA will accept a copy of your degree or

official transcripts, a letter from your college or university confirming
your degree, or a letter from an academic evaluation service
confirming your degree level.

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c. Register for an Exam Part
Once you have met all entry requirements and your application is approved,
log into CCMS and register for the exam part you wish to take. Once payment
for your exam registration is complete, your exam authorization window is
180 days or until your program expiration date. You must schedule the exam
part for which you registered within your 180-day window.

d. Schedule Your Exam at Pearson VUE

Log into your CCMS account to schedule your exam at Pearson VUE.
Alternatively, you can schedule your appointment by calling Pearson VUE
customer service (www.pearsonvue.com/iia/contact/). You will be able to
select the preferred testing center location.
Review your appointment details to ensure you have the correct time, date,
and location before you finalize your payment. Pearson VUE will send you
an email confirming your payment and your appointment details.
Note for Rescheduling Exam - You can change your appointment through
CCMS or by contacting Pearson VUE up to 48 hours prior to your confirmed
appointment, but there is a fee for rescheduling.

CIA EXAM FEES

While we recommend everyone join The Institute of Internal Auditors, all
non-students should definitely join The IIA before beginning CIA exam
registration because IIA members save a total of $525 on exam fees
compared to non-members. (Students pay even lower fees than IIA
members.)
Aside from saving on exam fees, IIA membership affords many other
benefits, such as access to the latest information about the profession;
complimentary members-only webinars with CPE; member-only rates on
in-person, online, and on-demand training; and exclusive networking
opportunities. Additionally, North American IIA members have their CPE
reporting fee waived.

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Non-Member Member Student

Application Fee USD 240 USD 120 USD 65
CIA Part 1 Exam Fee USD 445 USD 310 USD 245
CIA Part 2 Exam Fee USD 415 USD 280 USD 215
CIA Part 3 Exam Fee USD 415 USD 280 USD 215
Total USD 1,515 USD 990 USD 740

IIA MEMBERSHIP FEES

IIA membership comes with its own annual fees, which vary by membership
type. If you pass all 3 parts of the CIA exam in one year, which is completely
possible, your certification fee savings will more than offset the membership
fee for one year.
But if passing takes longer, the amount you’ve paid for IIA membership
could exceed the amount saved on CIA certification. That said, remaining an
IIA member will still bring multiple benefits beyond just exam fee savings.
IIA membership fees are slightly more complicated for members of the
international community because certification processes, pricing, and taxes
may vary in countries where exams are administered through agreements
with IIA affiliates.
Contact your local IIA Institute to verify pricing in your country.
Membership Type Fee
Individual USD 290
Educator USD 200
Student USD 0

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INVESTMENT IN ZAIN CIA STUDY MATERIALS
S.No Product Price
1. CIA Part 1 Study Guide 2025 USD 89
2. CIA Part 1 Exam Questions 2025 USD 89

3. CIA Part 2 Study Guide 2025 USD 89

4. CIA Part 2 Exam Questions 2025 USD 89

5. CIA Part 3 Study Guide 2025 USD 89

6. CIA Part 3 Exam Questions 2025 USD 89

7. CIA Exam Review Complete Set 2025 - (this USD 299

includes the study guide and exam questions for all
three parts mentioned above in 45% discounted
pricing).

FREE CIA STUDY RESOURCES

Get access to sample of Zain’s CIA Study Guides and Exam Questions by
filling out a form on https://zainacademy.us/free-cia-study-materials/
I highly recommend that the candidates pay their dues through DEBIT
CARD only. This way, you will be free from all bank claims and will be much
relieved. The target must be to clear the exams on 1st Attempt so that the
examination fee is paid only once, and benefits of opportunity costs can be
derived.
REMEMBER to subscribe to Zain’s study guide and exam questions as they
are economical, comprehensive, and result oriented.
ALSO, REMEMBER that a discount of 45% is offered to candidates for
subscribing to all three parts together. However, if funds availability is an
issue, then subscribe for each part separately to get the time benefit.

PREPARING FOR THE CIA EXAM

Success on the CIA Exam requires a systematic approach to your
preparations and exam-day strategy. For most candidates, we recommend
beginning with Part 1 and proceeding in order. Sign up to take one part at a
time so you can focus all your efforts toward passing that one part.
Candidates should plan to complete all three parts in 6 months.

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TIME ALLOCATION
Candidates have to give at least three hours on daily basis and 6 hours on
weekends for 2 months continuously to each CIA Exam part.

HOW TO STUDY
You should study when and where you study best. The exam center is very
quiet, so candidates should complete practice exams in a similar
environment. Find study areas that are calm, well-lit, and distraction- free,
and schedule your study time for when you are most productive and able to
focus. If you’re a morning person, don’t expect to get your best studying done
into the late hours of the night. Make CIA review your top priority until
you’ve passed the exam.
Zain CIA Review makes it easy to study anywhere. Access your course on
your phone, tablet, or laptop. Look for nearby libraries, hotels, coffee shops,
and restaurants that have free Wi-Fi, a good ambiance, and comfortable
chairs. If your commute is long or you use public transportation, consider
spending that time listening to video lectures.

SET ATTAINABLE GOALS

Make realistic and manageable goals to help stay motivated. Just take it one
step at a time. Breakdown “passing the CIA exam” into smaller, more
achievable parts. It’s easy to feel overwhelmed by everything in front of you,
but breaking your exam preparation into manageable blocks makes passing
simple. Have an idea of how much you want to accomplish in each study
session and hold yourself to that goal.

YOU NEED A CIA PREP COURSE

You need a review course to pass. Preparing for the exam on your own would
require you to spend nearly as much time figuring out what to study and
searching for materials as it would for you to study for the exam.
We’ve already done that work for you. More specifically, our team of internal
audit experts, mostly professors at top-ranking accounting schools with
actual industry experience, has made sure every topic is taught in a way you
can easily understand.

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Zain CIA Review features the most comprehensive coverage of exam content
using proven techniques and innovative new technology to help you study
smarter.

Our system is all about breaking your studies down into simple steps and
straightforward recommendations, and our easy-to-use platform gives you
responsive feedback so you always know where you are, what’s next, and
how far you have left to go.

ZAIN CIA REVIEW 2025 WITH LATEST FEATURES

Zain CIA Review 2025 have two prime resources and two secondary
resources.
a. Prime Resources
I. CIA Study Guides 2025 - have key learning outcomes, questioning
mind study points, true false questions, fill in the blanks, one word
answer questions, matching questions, memory aids and mnemonics,
mind maps and practical examples.

II. CIA Exam Questions 2025 – have challenging multiple choice

questions (of higher IQ levels) with explanations of all answer choices.

b. Secondary Resources
I. CIA Learning Videos – they are accessible from Zain Academy’s
YouTube channel

II. CIA Support and Guidance – candidates can ask unlimited questions
either through the WhatsApp or Email till they pass the exams.

HOW TO ATTEMPT MULTIPLE CHOICE QUESTIONS

a. Start by reading the sentence actually asking the question.
This is usually the last sentence of the question stem. Use the question to
decide what information in the stem is essential and what is extraneous.
b. Read the answer choices carefully
• Even if the first answer appears to be the correct choice, do not skip
the remaining answer choices. Questions often ask for the “best” of
the choices provided.

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• Treat each answer choice as a true/false question as you analyze it.
• In computational items, distractors are carefully calculated to
represent common mistakes. Be careful, and double-check your
computations if time permits.

c. Determine the best available answer

By exam day, you’ll likely have an idea of what the correct answer will look
like before you see it. As you practice answering questions and get more
familiar with the concepts being tested, you’ll hone your intuition and get
better at identifying what exactly you’re being asked.
Even if you’re stumped, and sometimes you might be, don’t panic. You don’t
need to get every single question right to pass.
NOTE: Never leave a question unanswered.
Your score is based on the number of questions you answer correctly. You
are not penalized for answering a question wrong, which is why we
recommend educated guessing. Remember to click the “Mark for Review”
button in the upper-right corner of your screen for every question you guess
on and plan on returning to later if time allows.

EDUCATED GUESS TECHNIQUE

Do not agonize over any one item. If you encounter a CIA exam question that
is ambiguous or unfamiliar, make an educated guess.
Educated Guessing involves the three steps.
a. Rule out easily identifiable distractors.
b. Speculate on the rationale behind the question.
c. Select the best answer or your best guess between equally appealing
options.
You have a 25% chance of answering the question correctly by blindly
guessing. For many multiple-choice questions, a few answer choices can be
eliminated with minimal effort, which increases your odds considerably of
getting the answer right.
Once you’ve made your guess, mark that question and move on. You can
return to the question during your review, but you should not waste time
agonizing over your best guess before you’ve answered all of the exam
questions.

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When you review, unless you made an obvious mistake or computational
error, try to avoid changing the answer at the last minute. Your first guess is
usually the most intuitive.

During your study sessions, read the answer explanations for all of the
questions so you can see the results of your guess and get the information
you need to avoid guessing next time.

LEARN FROM YOUR MISTAKES THROUGHOUT YOUR

STUDIES
Learning from questions you answer incorrectly is very important. Each
question you answer incorrectly during your practice exams is an
opportunity to avoid missing actual test questions on your CIA exam.
Carefully study the answer explanations provided until you understand why
the original answer you chose was wrong, as well as why the correct answer
is right. You should even do this for questions where you made an educated
guess. Mistakes are more memorable than getting a question right, so this
will help inform your intuition for future questions and sharpen that skill
before exam day.

COMMON ERRORS BY CANDIDATES

I. Misreading the question stem
II. Not understanding what is required
III. Making a math error
IV. Applying the wrong rule or concept
V. Getting distracted by one or more of the answer choices
VI. Eliminating answers from consideration too quickly
VII. Not knowing the topic tested

The first six reasons can be fixed by practicing and working through the
questions systematically and keeping calm on test day. The seventh is just a
matter of giving yourself enough time to learn the material.

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Zain Time Management System for CIA Part 1
The key to finishing 125 MCQs in 150 minutes for Part 1 is answering them
at a rate of one minute per question. At this rate, you can complete all the
questions in 125 minutes and have 25 minutes left over to review any marked
questions.
If you average one minute per question during the exam, you’ll begin a new
set of 20 questions every 20 minutes.

ZAIN TIME MANAGEMENT SYSTEM FOR CIA PART 2 AND 3.

Both Part 2 and Part 3 require you to answer 100 MCQs in 120 minutes.
Though the amount of questions and total testing time differ from Part 1, we
still recommend answering MCQs at a rate of one minute per question.
By averaging one minute per question you can complete all 100 MCQs in 100
minutes. This leaves you 20 minutes left over to review any marked
questions.

TIME MANAGEMENT ADVICE

Practice makes perfect. It’s difficult at first, but it is reasonable for most
candidates to develop a multiple-choice question- answering technique that
gets them to a rate of one minute per question. The built- in review time
from this method gives you the option to spend more time on difficult
questions if necessary.
Any extra time you build into your overall budget should be used wisely.
Ultimately, you want to make full use of all time available. No matter how
much extra time you have left, use it purposefully and use it all; don’t leave
the testing center early.

PASSING THE CIA EXAM

You will be more confident on exam day if you know what to expect.
a. The Day before Exam Date
Drive to the testing center prior to your exam date to make sure you can
easily locate it and know how to find parking on the day of the exam. This
helps eliminate a potential exam day stressor.

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b. The Day of your Exam

Plan to arrive at the Pearson VUE test center at least 30 minutes before your
scheduled appointment time. When you arrive, you will check in and present
your government-issued ID.
Your ID must
• Contain your name exactly as it appears on your Pearson VUE exam
appointment confirmation letter and exactly as you provided it when
applying to the program and registering for your exam
• Have a permanently affixed photo of your face
• Be current
• Be an original document
Acceptable Forms of Identification
• Government Issued Driver’s license
• Passport
• Military ID
• Alien Registration Card
• Government Issued local language ID
Unacceptable Forms of Identification
• Employee ID / Work Badge
• University / College ID
• Insurance Card
What to bring to Pearson Vue
• Your appointment confirmation letter from Pearson Vue
• Your registration confirmation notification from the IIA
• Your identification

c. Beginning Your Exam in Person

After you check in, you will be escorted to a computer station and given an
erasable note board. There may be candidates taking different exams in the
room with you (financial exams, medical exams, etc.).
Do not start the test right away. Once you sit down, make sure you get
situated by testing your pens, properly adjusting your chair, and taking a
deep breath before touching your computer. The timer does not start until

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you see the first question, so take a few minutes to make sure you are in
control by mentally preparing and relaxing.
After you are logged into your exam, proceed through the welcome and
nondisclosure agreement screens without delay. There is a time limit on the
initial screens, and if that time limit is exceeded, the exam session will
automatically begin.
If you encounter a computer problem, report it immediately to the exam
proctor. Don’t try to resolve it yourself.
If you leave the testing room for any reason, you will be required to sign the
test center log and show your identification to reenter the room. Don’t forget
to bring it with you!
When you finish your exam, quietly leave the testing room, return your
erasable note board and markers to the exam administrator, and collect your
belongings. You will receive a printed unofficial score report upon
completion of your exam.

d. Score Reporting
Examination scores are confidential and are shared only with the candidate
and the IIA. Candidates receive an unofficial printed score report before
leaving the test site. For a passing exam, the score report will only show a
passing designation. It will not show a score.
For a failing exam, the score report will show a scaled score between 250 and
599. In addition, diagnostic information detailing the section(s) in which the
candidate needs improvement is provided. This information will aid future
exam preparation. An email will be sent when official results are available in
CCMS.

RETAKING THE EXAM

The IIA’s Retake Policy limits the number of times you may take the exam
to eight (8) during your program eligibility window.
The earliest appointment date that you will be able to schedule and retake a
failed exam is 30 days from the date you last took that exam. You must
complete a new registration with payment to retake a failed exam. If you do
not complete your certification program within the program eligibility
window, you will forfeit all fees paid and exam(s) passed.

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You are not permitted to retake an exam that you previously passed, unless
your certification program window has expired. If you need to retake an
exam or exam part that you previously passed (because your certification
program window expired), the earliest exam appointment date that you can
select will be 30 days from the date you last took that exam.

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CIA CANDIDATE MISCONDUCT AND CHEATING

The IIA and its Professional Certifications Board consider candidate
misconduct related to the certification process a serious offense. If you
violate any of the testing rules, attempt to remove test items from the center,
or are disruptive to other candidates, your exam may be terminated, your
test scores may be invalidated, and you may be disqualified from
participation in all IIA certification programs. The IIA may also take other
actions to the extent permitted by law.

THE IIA’S NONDISCLOSURE POLICY

As part of The IIA’s nondisclosure policy, a confidentiality and
nondisclosure statement must be accepted before each part is taken. This
statement is reproduced here to remind all CIA candidates about The IIA’s
strict policy of nondisclosure, which Zain supports and upholds.

AFTER YOU PASS

Congratulations! Once you pass the exam and meet all other program
requirements, you will be eligible to receive your certificate.

MAINTAIN YOUR CIA CERTIFICATION

After certification, CIAs are required to maintain and update their
knowledge and skills. Practicing CIAs must meet Annual Certification
Renewal requirements and complete 40 hours of Continuing Professional
Education (CPE) every year by December 31. The CPE requirement begins
the calendar year after you receive your CIA certification.
Complete the Annual Certification Renewal process in CCMS by signing a
statement that all applicable requirements have been met. Processing fees
vary based on location, membership status, and the method you use to
report.

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ENJOY YOUR CIA BENEFITS

A higher earning potential and better opportunities are yours once you
achieve certification. Display your certification proudly! Use a digital badge
and get your electronic or printed certificate from the IIA. Log into CCMS
and complete the Certificate Order Form to request it. Plus, you can opt in
to be listed in The IIA Certification Registry, a public record that can help
potential employers verify your certification.

SHARE YOUR FEEDBACK

We value and depend on feedback from CIAs and CIA candidates to know
how to improve our materials, specifically on topics to be strengthened
and/or added in our course.
When you have completed the exam, please post a review and rating on Zain
Academy’s Google Page We want to know how well we prepared you for your
testing experience, plus your feedback can help guide the next batch of CIA
candidates.

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LETTER FROM MUHAMMAD ZAIN

19 May 2025

Dear Future CIAs,

May the Peace, Blessings, and Mercy of Allah be upon you—and especially
upon the Noble Messenger, Prophet Muhammad (Peace Be Upon Him), his
Family, and his Companions.

You were created for greatness. You were not meant to merely
survive, but to illuminate the world with purpose.

Within each of us lies an ocean of untapped brilliance. Allah has gifted us

the divine spark of curiosity, intellect, and resilience—enough to conquer the
vastness of both inner and outer worlds. Never forget: the soul that seeks
knowledge is on a journey towards light. Even amidst the darkest skies, the
stars rise—and so can you.

We are now standing on the edge of a remarkable era. Humanity is

witnessing a new dawn—the age of accelerated intelligence, digital
breakthroughs, and limitless innovation. Everything is changing: how we
learn, how we work, and how we grow. In a world where information is
available at the blink of an eye, those who master critical thinking,
ethical leadership, and strategic insight will rise above the rest.

This is where your journey begins—with the CIA Part 3 Study Guide
2025, an elite resource crafted not just for passing an exam but for
transforming your life and mindset as an internal auditor and
global professional.

Why choose Zain CIA Study Guides and Exam Questions?

Because it’s more than a book. It’s a movement. A mentorship. A mission.

Crafted with excellence and built for the future, the CIA Part 3 Study
Guide 2025 is your bridge between ambition and achievement. Here’s
what awaits you:

• 385 Questioning Mind Study Points – Sharpen your

professional skepticism and analytical reasoning

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• 300 True/False Questions – Reinforce core concepts with
clarity

• 165 Fill in the Blanks & 189 One-Word Answer

Questions – Test retention with active recall

• 65 Matching Questions – Build strong concept associations

• 56 Memory Aids & Mnemonics – Simplify learning with

creative techniques

• 26 Mind Maps – Visualize complex topics effortlessly

• 🛠 70 Practical Examples – Apply theory to real-world audit

scenarios

• 122 Key Learning Outcomes – Stay focused and exam-ready

• Supplement with CIA Part 3 Exam Questions 2025 – Over

1,772 MCQs to build rock-solid exam confidence

All this is delivered in an integrated, printable PDF format—with no

device restrictions, no expiration, and lifetime access.

But the real difference?

My promise to you—what I call the “Power Guarantee”:

I will be with you every step of the way—until you pass.
Ask any question. Any time. Through WhatsApp or Email. No limits. No
barriers. Just pure support.

The Zain Academy approach is spiritually grounded, academically rigorous,

and practically designed. It’s meant not only to prepare you for the CIA
exam, but to ignite your potential to thrive in this fast-evolving
world.

Let this certification be more than a qualification. Let it be a witness of

your excellence, a step toward financial independence, and a
means to serve humanity with integrity.

I urge every candidate to pursue entrepreneurship after earning the CIA

designation. The age of dependency is ending. True freedom lies in
owning your time, vision, and work. Invest wisely in real assets—gold,
silver, and land. And most importantly, free yourself from the chains
of interest-based debt. Live light. Spend consciously. Leave a legacy.

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Do not fear the future. You were born for it. Replace fear with curiosity.
Replace doubt with faith. Replace hesitation with action.

Let your pursuit of knowledge be a form of worship. Let every page turned
be a continuous blessing for us both.

I dedicate this work to Prophet Muhammad (Peace Be Upon Him),

the guiding light and mercy to all creation. May the knowledge shared
become a source of continuous reward for me in the Hereafter—Ameen.

Believe. Begin. Become.

Your moment is now.

With Love, Care, and an Unshakable Belief in You,

Muhammad Zain

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SECTION A – INTERNAL AUDIT OPERATIONS
(WEIGHTAGE 25%)
KEY LEARNING OUTCOMES
Inside the Engine Room: Audit Ops Uncovered!
➢Describe the strategic, operational, and administrative roles of the
internal audit function in supporting governance, risk
management, and control.

➢Explain the chief audit executive’s (CAE) responsibilities for

planning, organizing, directing, and monitoring internal audit
activities.

➢Evaluate how documented methodologies support consistency,

quality, and conformance with the Global Internal Audit Standards.

➢Analyze the importance of ongoing monitoring and internal quality

assessments to ensure audit performance meets expectations.

➢Differentiate between assurance and advisory services, and assess

how the CAE balances resources between them.

➢Identify when and why internal audit methodologies must be

revised, such as due to changes in standards, laws, or organizational
strategy.

➢Summarize the components and benefits of maintaining a formal

internal audit operations manual or software-based guidance.

➢Discuss the role of internal audit in assessing compliance risks and

evaluating governance and control frameworks like COSO.

➢Explain the budgeting responsibilities of the CAE, including

planning, variance analysis, and obtaining board approval.

➢Evaluate how budgeting functions as a planning, control, motivational,

and communication tool within the internal audit function.

➢Apply budgeting principles to align financial resources with audit

strategies and objectives.

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SECTION A – INTERNAL AUDIT OPERATIONS

(WEIGHTAGE 25%)
STUDY POINTS

S.No Description
1. Who is responsible for managing the Internal Audit
Function?

The IIA’s Global Internal Audit Standards (Standards) state that

the chief audit executive (CAE) is responsible for managing the
internal audit function.

This responsibility includes strategic planning, obtaining and

deploying resources, building relationships, communicating with
stakeholders, and ensuring and enhancing the performance of the
function.

Mnemonic: “𝐏𝐎𝐃 − 𝐌”

 P – Planning the internal audit strategy.

 O – Organizing resources.
 D – Directing internal audit activities.
 M – Monitoring performance and compliance.

2. Who is responsible for monitoring Internal Audit

Operations?

The CAE is responsible for monitoring internal audit operations to

ensure that the established methodologies and resource
commitments facilitate progress toward performance objectives.

The CAE may delegate some of these responsibilities but retains

ultimate responsibility.

Example:

At a government agency, the CAE notices a spike in advisory requests for

digital transformation projects. She reallocates 20% of the assurance

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engagement resources to advisory roles, ensuring sufficient risk oversight
is maintained by automating routine compliance testing.

3. Which Standards address the Ongoing Monitoring

requirements?

The following standards address the ongoing monitoring

requirements:

• Standard 9.3 Methodologies.

• Standard 12.1 Internal Quality Assessment.

4. Examine Standard 9.3: Methodologies?

The chief audit executive must establish methodologies to guide

the internal audit function in a systematic and disciplined manner
to implement the internal audit strategy, develop the internal audit
plan, and conform with the Standards. The chief audit executive
must evaluate the effectiveness of the methodologies and update
them as necessary to improve the internal audit function and
respond to significant changes that affect the function.

5. Discuss the Standard 12.1: Internal Quality Assessment?

The chief audit executive must develop and conduct internal

assessments of the internal audit function’s conformance with the
Global Internal Audit Standards and progress toward performance
objectives.

Mnemonic: “𝐌𝐀𝐏”

 M – Measure performance.
 A – Assess conformance with standards.
 P – Provide feedback.

6. What is Ongoing Monitoring?

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Ongoing monitoring involves the day-to-day supervision, review,
and measurement of the internal audit function. Ongoing
monitoring should be incorporated into the policies and practices
used to manage the internal audit function.

7. List the Mechanisms used for monitoring of the efficiency

and effectiveness of the Internal Audit Function?

Mechanisms used for monitoring of the efficiency and

effectiveness of the internal audit function include:

• Checklists or automated tools to provide assurance on internal

auditors’ compliance with established methodologies.

• Feedback from internal audit stakeholders regarding the

efficiency and effectiveness of the internal audit team.

• Metrics indicating the adequacy of resource allocation (such as

budget-to-actual variance), the timeliness of engagement
completion, and the achievement of the internal audit plan.

Example:

In an international NGO, the CAE implements a KPI dashboard that shows

budget-to-actual variance and audit cycle time. Monthly reports are sent
to the audit committee to highlight areas for efficiency improvements.

8. Clarify the nature of the work of the Internal Audit

Function?

The internal audit function assists an organization achieve its

objectives by bringing a systematic, disciplined approach to
evaluate and improve the effectiveness of governance, risk
management, and control processes.

Governance, risk management, and control processes

implemented by management are related.

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• Governance – “The combination of processes and structures
implemented by the board to inform, direct, manage, and
monitor the activities of the organization toward the achievement
of its objectives.” (The IIA Glossary).

• Risk management – “A process to identify, assess, manage,

and control potential events or situations to provide reasonable
assurance regarding the achievement of the organization’s
objectives.” (The IIA Glossary).

• Control processes – “The policies, procedures, and activities

designed and operated to manage risks to be within the level of
an organization’s risk tolerance.” (The IIA Glossary).

o Control – “Any action taken by management, the board, and

other parties to manage risk and increase the likelihood that
established objectives and goals will be achieved.” (The IIA
Glossary).

o Management plans, organizes, and directs the performance of

sufficient actions to provide reasonable assurance that
objectives and goals will be achieved.

• The CAE interviews the board and senior management about the
responsibilities of each stakeholder.

• An understanding of the organization also is necessary.

Furthermore, established frameworks published globally (e.g.,
COSO) may be used in the internal auditors’ evaluations of the
three processes. The framework may be that adopted by senior
management. If the organization has not adopted such a
framework, the CAE may recommend one.

• To acquire this understanding, the CAE ordinarily reviews the

organization’s mission, strategic plan, key objectives, related
risks and controls, and the minutes of the board.

• After discussing with the board and senior management, the CAE
may document in the internal audit charter the roles and

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responsibilities of the board, senior management, and the
internal audit function.

• When determining the strategy for assessing governance, risk

management, and control, the CAE typically considers:

1) The maturity of these processes.

2) The seniority of the persons responsible.

3) The organizational culture.

• Internal auditors may use their knowledge, experience, and best

practices to provide findings of weaknesses and
recommendations.

• Furthermore, internal auditors always should be mindful of

compliance.

• Compliance is defined in The IIA Glossary as “adherence to laws,

regulations, contracts, policies, procedures, and other
requirements.”

• The internal audit function must evaluate the:

o Risks involved in governance, operations, and information

systems that relate to compliance.

o Controls over compliance.

Example:

At a manufacturing firm, the internal audit team evaluates the company’s

use of the COSO framework and identifies a weak risk response process in
supply chain disruption. A recommendation is made to implement
scenario-based risk simulations.

Mnemonic: “𝐆𝐑𝐂” - Visualize GRC as the foundation of a secure

building where:

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External providers of internal auditing services may report to
senior management or the CAE.

Example:

A university’s internal audit function lacks expertise in environmental

compliance audits. The CAE engages a consulting firm specializing in
environmental regulations to conduct a co-sourced audit. The CAE ensures
the firm is independent, coordinates the engagement scope, and integrates
findings into the annual report to the board.

Mnemonic: “𝐂𝐎𝐑𝐄”

 C – Co-sourcing = Internal + External collaboration.

 O – Ongoing support or specific engagement.
 R – Responsibility remains with the organization.
 E – Evaluate provider’s independence, skills, and care.

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SECTION A – INTERNAL AUDIT OPERATIONS
(WEIGHTAGE 25%)
TRUE FALSE QUESTIONS AND ANSWERS
S.No Questions Answers
1. The chief audit TRUE. The CAE may delegate
executive (CAE) is responsibilities but retains
ultimately accountability for internal audit
responsible for operations.
managing the
internal audit
function, even when
duties are delegated.
2. The internal audit FALSE. Advisory services provide
function does not guidance without taking on
guarantee results management roles or guaranteeing
when performing outcomes.
advisory services.
3. The CAE must TRUE. Standard 9.3 requires
establish and methodologies that are systematic and
regularly evaluate responsive to changes.
methodologies to
ensure internal audit
practices conform to
standards.
4. The CAE is required TRUE. This aligns with Standard 12.1 on
to develop and internal quality assessment.
conduct internal
quality assessments
of the internal audit
function.
5. Internal audit FALSE. Methodologies provide detailed
methodologies do guidance for applying the Standards
not replace the IIA effectively.
Standards but
supplement them.
6. The CAE is TRUE. This includes financial, human,
responsible for and technological resources.
obtaining and
deploying resources

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talent with audit
needs.
91. External providers TRUE. The CAE can outsource for
may be used when specialized knowledge.
internal audit lacks
specific expertise.
92. The board may FALSE. The organization retains full
transfer audit responsibility for the audit function.
oversight
responsibility to an
external provider.
93. Outsourcing and co- TRUE. Compliance ensures quality and
sourcing must consistency.
conform to the
Standards.
94. The CAE must TRUE. Standard 9.5 promotes efficient
coordinate with collaboration and avoids duplication.
internal and external
assurance providers.
95. Independence FALSE. Independence and objectivity
concerns do not remain essential.
apply when using
external providers.
96. Co-sourcing involves TRUE. It blends expertise from both
joint performance of parties.
engagements by
internal and external
staff.
97. An external provider TRUE. This would impair objectivity.
cannot be involved
in an activity they
manage.
98. CAE communication FALSE. Direct board communication is
with the board is essential for oversight.
optional if senior
management is
informed.
99. The CAE should TRUE. This supports transparency and
communicate ongoing resource planning.
periodically about

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SECTION A – INTERNAL AUDIT OPERATIONS

(WEIGHTAGE 25%)
FILL IN THE BLANKS
S.No Fill in the Blanks
1. The __________ is responsible for managing the internal audit
function, including strategic planning, resource deployment, and
performance enhancement.

2. Internal auditors provide __________ and advisory services to

add value and improve an organization's operations.

3. According to Standard 9.3, the CAE must establish and evaluate

__________ to guide the internal audit function in a systematic
and disciplined manner.

4. Ongoing __________ involves day-to-day supervision, review,

and measurement of the internal audit function.

5. The internal audit function assists an organization by evaluating

and improving the effectiveness of __________, risk
management, and control processes.

6. The IIA defines __________ as “adherence to laws,

regulations, contracts, policies, procedures, and other
requirements.”

7. Reasonable __________ is provided when controls reduce

risks and restrict deviations to a tolerable level using cost-
effective measures.

8. __________ services involve internal auditors offering

guidance to stakeholders without assuming management
responsibilities.

9. Assurance services provide an objective evaluation of operations

and may result in either __________ or a higher level of
assurance.

10. According to Standard 10.1, the CAE must develop a

__________ to support the implementation of the internal
audit strategy.

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SECTION A – INTERNAL AUDIT OPERATIONS

(WEIGHTAGE 25%)
FILL IN THE BLANKS – ANSWER KEY
1. Chief audit executive 2. Assurance.
(CAE).
3. Methodologies. 4. Monitoring.
5. Governance. 6. Compliance.
7. Assurance. 8. Advisory.
9. Limited assurance. 10. Budget.
11. Budget. 12. Board.
13. Qualified. 14. Descriptions.
15. Structured. 16. Behavioral.
17. Technical. 18. Evaluation.
19. Job enrichment. 20. Intrinsic.
21. Career. 22. Feedback.
23. Technological. 24. Technology.
25. Limitations. 26. Chief audit executive (CAE).
27. Strategy. 28. Vision.
29. Strategic objectives. 30. Vision.
31. Mission. 32. SWOT (Strengths-Weaknesses-
Opportunities-Threats).
33. Internal. 34. External.
35. Gap. 36. Resource.
37. Resources. 38. Core.
39. Efficiency. 40. Revision.
41. Trust. 42. Key.
43. Formal. 44. Informal.
45. Risks. 46. Board.
47. Risk. 48. Oversight.

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SECTION A – INTERNAL AUDIT OPERATIONS

(WEIGHTAGE 25%)
ONE WORD ANSWER QUESTIONS
S.No Questions
1. What term describes adherence to laws, regulations, and policies?
2. What framework is commonly used by internal auditors to assess
governance, risk management, and control?
3. What is the preferred CIA exam term for sufficient performance?
4. Who is responsible for managing the internal audit function?
5. What term describes the assurance provided by well-designed
controls within acceptable deviation levels?
6. What type of services involve objective evaluation for compliance
and operations?
7. What type of services provide guidance without assuming
management roles?
8. What action taken by management helps manage risk and achieve
objectives?
9. What Standard requires the CAE to guide internal audit with
systematic methodologies?
10. What Standard requires internal assessments of internal audit
performance?
11. What is the combination of processes and structures implemented
by the board?
12. What process identifies and manages potential events affecting
objectives?
13. What ensures policies and procedures manage risks within
tolerance levels?
14. Who must manage the internal audit function’s budget?
15. What Standard relates to financial resource management?

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SECTION A – INTERNAL AUDIT OPERATIONS

(WEIGHTAGE 25%)
ONE WORD ANSWER QUESTIONS – ANSWER KEY
1. Compliance. 2. COSO.
3. Adequate. 4. CAE.
5. Reasonable. 6. Assurance.
7. Advisory. 8. Control.
9. 9.3 10. 12.1
11. Governance. 12. Risk.
13. Control. 14. CAE.
15. 10.1 16. Variance.
17. Budget. 18. 10.2
19. Structured. 20. Behavioral.
21. Enlargement. 22. Enrichment.
23. Extrinsic. 24. Intrinsic.
25. On-the-job. 26. Evaluation.
27. Training. 28. Development.
29. Mentoring. 30. Constructive.
31. 10.3 32. AMS (Audit Management
System).
33. Analytics. 34. GRC.
35. Collaboration. 36. Assurance.
37. Principle 9. 38. Vision.
39. SWOT. 40. Strategy.
41. Initiatives. 42. Principle 10.
43. Strategy. 44. Strategic.
45. Resource. 46. Gap.
47. Mission. 48. Objectives.
49. 11.1 50. Informal.

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SECTION A – INTERNAL AUDIT OPERATIONS

(WEIGHTAGE 25%)
MATCHING QUESTIONS
Matching Quiz 1:
CLUE MATCH Answer
1. Governance. a. Policies, procedures, and
activities designed and
operated to manage risks
to be within an
organization’s risk
tolerance.
2. Risk Management. b. Any action taken by
management, the board,
and others to manage
risk and increase the
likelihood that goals will
be achieved.
3. Control. c. A process to identify,
assess, manage, and
control potential events
or situations to support
objective achievement.
4. Control Processes. d. The combination of
processes and structures
used by the board to
direct and monitor the
organization toward its
objectives.
5. Reasonable e. Assurance that cost-
Assurance. effective controls reduce
risks to a tolerable level
and help achieve
objectives.

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Answer Key for Matching Quiz 1:
ANSWERS
1. d
2. c
3. b
4. a
5. e

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Matching Quiz 20:

CLUE MATCH Answer
1. Outsourcing. a. Organization retains
responsibility for internal
audit function even if
externalized.
2. Co-sourcing. b. Involves jointly
performed audits
between internal and
external teams.
3. Standard 9.5 c. Requires CAE to ensure
coordination and avoid
duplication of effort.
4. External Provider d. Must assess
Evaluation. independence,
competency, and
objectivity of providers.
5. Quality Assurance e. Must be maintained even
Responsibility. when external service
providers are used.

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Answer Key for Matching Quiz 20:

ANSWERS
1. a
2. b
3. c
4. d
5. e

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SECTION A – INTERNAL AUDIT OPERATIONS

(WEIGHTAGE 25%)
MIND MAPS
❖ Introduction to Internal Auditing

• Purpose and Role

o Provide assurance and advisory services to improve governance, risk

management, and control.

o Add value by enhancing operational effectiveness.

• CAE Responsibilities

o Manage methodologies and monitor internal audit operations.

o Balance assurance and advisory services.

o Maintain strategic planning, stakeholder communication, and

performance improvement.

o Can delegate but retains ultimate accountability.

• Standards Governing the Function

o Standard 9.3: Establish, evaluate, and update methodologies.

o Standard 12.1: Perform internal quality assessments.

• Monitoring Mechanisms

o Checklists/automated tools for methodology compliance.

o Stakeholder feedback on audit efficiency.

o Performance metrics (e.g., budget-to-actual variance, timeliness, goal

achievement).

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• Field Offices

Enhance efficiency by reducing travel, improving service, and morale.

❖ Managing External Audit Service Providers

• Outsourcing vs. Co-sourcing

o Outsourcing: Full/partial external performance.

o Co-sourcing: Collaboration on specific engagements.

• CAE’s Role

o Coordinate with service providers (Standard 9.5).

o Ensure independence and quality assurance.

o Maintain oversight and accountability.

• Evaluation of Providers

Assess independence, competence, objectivity, and professional care.

• Appropriate Use Example

Engage actuarial consultant for insurance-related risk if internal

expertise is lacking.

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SECTION B – INTERNAL AUDIT PLAN (WEIGHTAGE 15%)

KEY LEARNING OUTCOMES
The Game Plan Behind Every Great Audit..
➢Identify sources of internal audit engagements including routine
activities, management requests, and regulatory requirements.

➢Describe how emerging technologies influence internal audit

engagements and risk assessments.

➢Evaluate the importance of maintaining objectivity and

independence in assurance and advisory services.

➢Assess the ethical and control environment to determine the need

for internal audit engagements.

➢Explain how whistleblower reports, external audit findings,

and legal mandates contribute to the audit engagement pool.

➢Define risk in the context of internal auditing and describe its

components (inherent, control, detection).

➢Explain the steps in developing a risk-based audit plan, including

risk identification, prioritization, and resource estimation.

➢Evaluate how stakeholder input, organizational strategy, and

prior audit results influence audit planning.

➢Illustrate how the audit universe is constructed and used to guide

the internal audit function.

➢Develop audit plans that are aligned with organizational

objectives and adaptable to changing risks.

➢Differentiate between types of audit risks and assess how to

respond to each risk type through audit planning.

➢Establish engagement objectives, scope, and resource

allocations as part of the documented engagement plan.

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SECTION B – INTERNAL AUDIT PLAN (WEIGHTAGE 15%)

STUDY POINTS
S.No Description
1. Are internal auditors allowed to conduct Assurance and/or
Advisory services?

Internal auditors may conduct assurance and/or advisory

services as part of their normal or routine activities as well as in
response to requests by management.

Each organization considers the type of activities to be offered

and determines whether specific policies or procedures need to
be developed for each type of activity.

2. Can internal auditors provide Assurance and/or Advisory

services relating to operations for which they had previous
responsibilities?

Internal auditors are sometimes requested to provide assurance

and/or advisory services relating to operations for which they had
previous responsibilities or had conducted assurance services.

Objectivity must be maintained when drawing conclusions and

offering advice to management.

If impairments of independence or objectivity exist prior to

commencement of the advisory engagement, or subsequently
develop during the engagement, disclosure is made immediately
to management.

3. Who shall request evaluations of Internal Controls?

The board, management, or other governance body should

request evaluations of internal controls as part of its oversight.

4. List the questions for evaluations of Controls?

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The internal audit function’s evaluations depend on answers to
the following questions:

• Are the ethical environment and culture strong?

o Do board members and senior executives set examples of high

integrity?

o Are performance and incentive targets realistic, or do they

create excessive pressure for short-term results?

o Is the organization’s code of conduct reinforced with training

and top-down communication?

• Does the message reach the employees in the field?

o Are the organization’s communication channels open? Do all

levels of management get the information they need?

o Does the organization have zero tolerance for fraudulent

financial reporting at any level?

• How does the organization identify and manage risks?

o Does the organization have a risk management process, and

is it effective?

o Is risk managed throughout the organization?

o Are major risks candidly discussed with the board?

• Is the control system effective?

o Are the organization’s controls over the financial reporting

process comprehensive, including preparation of financial
statements, related notes, and the other required and
discretionary disclosures that are an integral part of the
financial reports?

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o Do senior and line management demonstrate that they accept
control responsibility?

o Is the frequency of surprises increasing at the senior

management, board, or public levels from the organization’s
reported financial results or in the accompanying financial
disclosures?

o Are communication and reporting effective throughout the

organization?

o Are controls seen as enhancing the achievement of objectives

or as a necessary evil?

o Are qualified people hired promptly, and do they receive

adequate training?

o Are problems fixed quickly and completely?

• Is monitoring strong?

o Is the board independent of management, free of conflicts of

interest, well informed, and inquisitive?

o Does internal auditing have the support of senior

management and the board?

o Do the internal and external auditors have and use open lines
of communication and private access to all members of senior
management and the board?

o Is line management monitoring the control process?

o Does the organization have a program to monitor outsourced

processes?

5. Mention the Other Potential Sources of Audit

Engagements?

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Other potential sources of audit engagements include but are not
limited to:

• The audit charter, which establishes the mandate of the internal

audit function.

• Review of whistleblower reports to identify breaches in control,

fraud, and other wrongdoings.

• Laws and regulations, e.g., employment laws mandating

occupational health and safety.

• Findings from reports of external audits.

• The result of ongoing risk assessment by management and

independent validations by the internal audit function.

Example:

A whistleblower hotline at a public hospital reports frequent stockouts of

essential medical supplies. The internal audit team initiates an unplanned
audit engagement to investigate procurement and inventory controls.
During the audit, it is discovered that the inventory system was
manipulated by a staff member who had prior responsibility in the area.
The CAE ensures another auditor conducts the investigation to maintain
objectivity.

Mnemonic: "𝐀 𝐋𝐀𝐘𝐄𝐑 𝐨𝐟 𝐑𝐈𝐒𝐊𝐒"

 A – Audit Charter (mandate for internal audit).

 L – Laws and Regulations (e.g., OSHA).
 A – Advisory Requests (from management or board).
 Y – YO Tech (emerging technologies like AI, IoT, RPA).
 E – External Audit Reports (findings as input).
 R – Risk Assessments (ongoing by IA or management).
Of
 R – Reports from Whistleblowers (fraud, breaches).
 I – Internal Control Evaluations (requested by management/board).
 S – Strategic Changes (business model shifts).

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 K – Key Operations Review (based on cycles or changes).
 S – Special Circumstances (fraud, complaints, crises).

6. Determine the Emerging Technology Practices?

Organizations (including internal auditors) must assess the

effects on information security as technology is improved and
replaced with more advanced technology. Additional sources of
potential engagements include but are not limited to the
following:

• Smart machines.

• Bring your own device (BYOD).

• The Internet of Things (IoT).

• Artificial intelligence (AI).

• Robotic process automation (RPA).

• Blockchain.

• Digital assets.

7. What are Smart Machines?

Smart machines, such as robots and self-service checkout

counters, are an application of automation technology that
enables processes or procedures to be performed without human
assistance. The characteristics of smart machine technology
include but are not limited to:

• Learning and operating on their own.

• Adapting their behavior based on experience (learning).

• Generating unanticipated results.

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 1st Line – Owns and manages risks (Operations, HR).

 2nd Line – Supports and monitors risk (Compliance, Risk).
 3rd Line – Provides independent assurance (Internal Audit).
 G – Governing body ensures alignment and oversight.
 O – Objective achievement is the common goal.

83. Identify the purpose of Three Lines Model?

The Three Lines Model helps organizations identify structures

and processes that best assist the achievement of objectives and
facilitate strong governance and risk management.

An important aspect of the Three Lines Model is creating and

protecting value through alignment, communication,
coordination, and collaboration.

84. Identify the approach of Three Lines Model?

The Three Lines Model depicts the top-down risk-based approach

that represents the linkage between organizational objectives and
risks. The CAE’s understanding of the organizational structure,
objectives, risks, and control environment is critical for the
development of an internal audit plan.

Example:

At a financial institution:

The first line (operations) manages credit risk by following loan approval
procedures.

The second line (risk management) reviews these practices quarterly.

The third line (internal audit) performs an independent assessment,

finding that exceptions were approved without second-line review. This
leads to tighter policy enforcement and board-level reporting.

85. List the Principles of IIA’s Three Lines Model?

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•Giving management the responsibility and resources to achieve
objectives and compliance with laws, regulations, and ethics.

•Establishing and overseeing the internal audit function.

88. Clarify the Principle 3: Management – First- and Second-

Line Roles?

First line roles most directly relate to delivery of products or

services to clients. They include support functions (e.g., human
resources). They are directly responsible for risk management.

Second line roles (some of which may be assigned to

specialists) assist with risk management (a first line role) by
providing expertise, support, monitoring, and challenge. Specific
objectives may relate to compliance, sustainability, ethics,
internal control, IT, quality, or enterprise risk management
(ERM).

89. Explain the Principle 4: Third Line Roles?

Internal audit:

•Provides assurance and advice on the adequacy and

effectiveness of governance, risk management, and compliance.

•Reports to management and the governing body on objective

achievement and continuous improvement. It may consider
assurance from other internal or external providers when
performing these responsibilities.

90. Discuss the Principle 5: Third Line Independence?

Internal audit independence is achieved through:

1) Accountability to the governing body.

2) Unfettered access to people, resources, and data.

3) Freedom from bias and interference.

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91. Clarify Principle 6: Creating and Protecting Value?

Alignment of the activities of roles (communication, cooperation,

and collaboration) collectively creates and protects value. It
ensures the reliability, coherence, and transparency of risk-based
decisions.

Mnemonic: "𝐆𝐈𝐌 𝐀𝐂𝐓"

 G – Governance structures for accountability.

 I – Internal audit independence (third line).
 M – Management owns risk (1st & 2nd lines).
 A – Alignment with stakeholder interests.
 C – Creating and protecting value.
 T – Third line provides assurance & improvement.

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SECTION B – INTERNAL AUDIT PLAN (WEIGHTAGE 15%)

TRUE FALSE QUESTIONS AND ANSWERS
S.No Questions Answers
1. Internal auditors TRUE. This dual role supports flexibility
may perform both in addressing various stakeholder
assurance and needs.
advisory services
based on routine
activities or
management
requests.
2. Internal auditors FALSE. They may do so, but only if
should not provide objectivity is maintained and any
assurance services impairment is disclosed.
for operations where
they previously held
responsibilities.
3. Whistleblower TRUE. These reports may highlight fraud
reports can be a or breaches in controls.
source of audit
engagements.
4. Objectivity must be TRUE. Maintaining objectivity ensures
maintained even credibility and reliability.
when providing
advisory services
related to previously
audited operations.
5. Emerging FALSE. They increase the need due to
technologies like AI new risk exposures.
and IoT reduce the
need for internal
audits.
6. Evaluation of TRUE. Leadership behavior
internal controls significantly impacts the control
should consider the environment.
ethical culture and
tone at the top.

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SECTION B – INTERNAL AUDIT PLAN (WEIGHTAGE 15%)

FILL IN THE BLANKS
S.No Fill in the Blanks
1. The __________ is responsible for establishing the internal
audit plan after consultation with senior management and the
board.

2. The internal audit plan must be based on a documented

assessment of the organization’s __________, __________,
and __________.

3. Audit __________ is the risk of reaching invalid audit

conclusions or providing faulty advice based on the audit work.

4. Inherent risk is the combination of internal and external risk

factors that exists in the absence of any __________ actions.

5. Control risk is the potential that the __________ will fail to

reduce controllable risk to an acceptable level.

6. Detection risk is the risk that the __________ procedures will

not detect a material misstatement.

7. The only component of audit risk directly controlled by the

auditor is __________ risk.

8. The audit risk model can be expressed as: Audit Risk =

(__________ risk × __________ risk) × __________ risk.

9. An __________ map is a matrix of the organization’s risks and

the assurance providers that cover those risks.

10. The __________ Lines Model helps organizations align roles

and responsibilities to achieve effective governance and risk
management.

11. In the Three Lines Model, the __________ line roles are
directly responsible for risk management.

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SECTION B – INTERNAL AUDIT PLAN (WEIGHTAGE 15%)

FILL IN THE BLANKS – ANSWER KEY
1. Chief audit executive 2. Strategies, objectives, risks.
(CAE).
3. Risk. 4. Management.
5. Controls. 6. Audit.
7. Detection. 8. Inherent, control, detection.
9. Assurance. 10. Three.
11. First. 12. Third.
13. Risk. 14. Evaluated, defined.
15. Strategy. 16. Resources.
17. Participative. 18. Society.
19. Management. 20. Operations.
21. Duplication. 22. Residual.
23. Appetite. 24. Risk tolerance.
25. Follow-up.

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SECTION B – INTERNAL AUDIT PLAN (WEIGHTAGE 15%)

ONE WORD ANSWER QUESTIONS
S.No Questions
1. What must internal auditors maintain to ensure unbiased
judgment?
2. What function is evaluated for effectiveness through audits?
3. What emerging technology enables processes without human
assistance?
4. What term describes personal devices used for work access?
5. What network connects everyday devices to the internet?
6. What intelligence mimics human reasoning in software?
7. What automation tool is used for repetitive tasks?
8. What technology supports secure, decentralized transactions?
9. What is the positive or negative effect of uncertainty on objectives?
10. Who is responsible for developing the internal audit plan?
11. What must the audit plan be based on annually?
12. What process categorizes areas for potential audits?
13. What term refers to audits scheduled based on time since last
review?
14. What is the risk of reaching invalid audit conclusions?
15. What risk arises from the nature of the account or activity?
16. What risk relates to failure of controls to manage risks?
17. What risk concerns failure to detect misstatements?
18. What is the only risk internal auditors can directly control?
19. What is the formula representing audit risk components?
20. What defines risk after controls are applied?
21. What are methods or processes that manage risk?
22. What term refers to the organization’s willingness to accept risk?
23. What is the acceptable variation in achieving objectives?

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SECTION B – INTERNAL AUDIT PLAN (WEIGHTAGE 15%)

ONE WORD ANSWER QUESTIONS – ANSWER KEY
1. Objectivity. 2. Control.
3. Automation. 4. BYOD.
5. IoT. 6. AI.
7. RPA 8. Blockchain.
9. Risk. 10. CAE.
11. Assessment. 12. Universe.
13. Cyclical. 14. Audit.
15. Inherent. 16. Control.
17. Detection. 18. Detection.
19. Model. 20. Residual.
21. Controls. 22. Appetite.
23. Tolerance. 24. Mapping.
25. Lines. 26. First.
27. Second. 28. Third.
29. Independence. 30. Charter.
31. Board. 32. ISO.

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SECTION B – INTERNAL AUDIT PLAN (WEIGHTAGE 15%)

MATCHING QUESTIONS
Matching Quiz 1:
CLUE MATCH Answer
1. Smart Machines. a. Allows computers and
devices to connect to the
internet and gather large
amounts of data via
sensors embedded in
products.
2. BYOD. b. A system where
individuals use their
personal computing
devices to access
organizational systems
and data.
3. Internet of Things c. Technology that can
(IoT). perceive, reason, learn,
and make decisions,
enhancing audit
processes.
4. Artificial Intelligence d. Automation tools capable
(AI). of learning and adjusting
behavior based on
outcomes.
5. Blockchain. e. A decentralized digital
ledger technology that
allows secure recording
of transactions and asset
transfers.

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Answer Key for Matching Quiz 1:

ANSWERS
1. d
2. b
3. a
4. c
5. e

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Matching Quiz 12:

CLUE MATCH Answer
1. Assurance Map. a. Integration of audit
efforts with compliance
and risk management to
avoid duplication.
2. Coordination b. Diagram aligning risks to
Meetings. internal and external
assurance providers.
3. Shared Engagement c. Collaboration with
Communications. government bodies to
evaluate compliance with
laws and regulations.
4. External Regulatory d. Helps internal and
Coordination. external auditors align
work schedules and share
insights.
5. Combined Assurance. e. Includes work programs,
results, and letters
exchanged between audit
teams.

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Answer Key for Matching Quiz 12:

ANSWERS
1. b
2. d
3. e
4. c
5. a

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SECTION B – INTERNAL AUDIT PLAN (WEIGHTAGE 15%)

MIND MAPS
❖ Sources of Potential Engagements

• Governance and Objectivity

o Internal auditors must maintain objectivity, even if previously

involved in operations.

o Disclosure is required if independence is impaired.

• Engagement Sources

o Normal/routine activities or management requests.

o Evaluation of internal controls requested by the board or governance.

• Evaluation of Controls: Key Questions

o Ethical environment and leadership tone.

o Risk identification and management.

o Control system effectiveness.

o Monitoring and board independence.

• Additional Engagement Sources

o Audit charter.

o Whistleblower reports.

o Laws/regulations (e.g., safety).

o External audit findings.

o Management’s risk assessment.

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SECTION C – QUALITY OF THE INTERNAL AUDIT

FUNCTION (WEIGHTAGE 15%)
KEY LEARNING OUTCOMES
From Good to Great: Elevating Audit Quality!!
➢Describe the components and purpose of a Quality Assurance and
Improvement Program (QAIP) within the internal audit
function.

➢Differentiate between internal and external assessments required

under a QAIP.

➢Explain the chief audit executive’s (CAE) responsibilities in

developing, implementing, and maintaining a QAIP.

➢Evaluate the significance of conforming with the IIA’s Global

Internal Audit Standards and the consequences of
nonconformance.

➢Identify appropriate disclosure requirements for instances of

nonconformance with the Standards.

➢Describe how internal and external quality assessments are

communicated to senior management and the board.

➢Recognize the requirements and best practices for performing

external quality assessments, including evaluator qualifications and
independence.

➢Explain the process and importance of self-assessments with

independent validation as an alternative to external assessments.

➢Illustrate how internal quality assessments are conducted,

including ongoing monitoring and periodic self-assessments.

➢Identify qualitative and quantitative Key Performance Indicators

(KPIs) used to evaluate internal audit effectiveness and efficiency.

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SECTION C – QUALITY OF THE INTERNAL AUDIT

FUNCTION (WEIGHTAGE 15%)
STUDY POINTS

S.No Description
1. Examine Standard 8.3: Quality?

The chief audit executive must develop, implement, and maintain

a quality assurance and improvement program that covers all
aspects of the internal audit function.

At least annually, the chief audit executive must communicate the

results of the internal quality assessment to the board and senior
management. The results of the external quality assessments
must be reported when completed.

2. Why is QAIP designed?

A QAIP is designed to enable an evaluation and a promotion of

the internal audit function’s conformance with the Standards, the
achievement of its performance objectives, and an assessment of
its efficiency and effectiveness in identifying opportunities for
improvement.

3. Mention the types of Assessments in the Program?

The program includes two types of assessments:

• External assessments.

• Internal assessments.

4. Mention the components of QAIP?

The QAIP consists of five components:

1)Internal assessments.

2) External assessments.

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3) Communication of QAIP results.

4) Proper use of a conformance statement.

5) Disclosure of nonconformance.

Mnemonic: "𝐈𝐂𝐄 𝐂𝐃"

 I – Internal assessments.
 C – Communication of results.
 E – External assessments.
 C – Conformance statement usage.
 D – Disclosure of nonconformance.

5. Mention the Standard 4.1: Conformance with the Global

Internal Audit Standards?

Standard 4.1: Conformance with the Global Internal Audit

Standards requires the internal audit function to perform its work
in accordance with the Standards. The QAIP must address this
requirement and state whether the function is in conformance.

Example:

At Evergreen Logistics, the CAE implements an internal QAIP that

includes periodic self-assessments. During one such review, they find that
several audit reports lacked timely follow-up documentation. The CAE
initiates a refresher training on documentation protocols. Separately, the
company invites a third-party Certified Internal Auditor every five years
to perform an external assessment. The 2025 review highlighted strong
stakeholder engagement but recommended improving audit risk
assessments.

6. How often the CAE should update QAIP?

The CAE should periodically evaluate the QAIP and update it if

needed to ensure that the internal audit function continues to

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operate effectively and to assure stakeholders that it continues to
add value by improving the organization’s operations.

7. What shall be Communicated regarding the QAIP?

Standard 8.3: Quality states that the CAE’s communications to

the board and senior management regarding the QAIP should
include:

• The scope, frequency, and results of internal and external

quality assessments conducted.

• Action plans that address deficiencies and opportunities for

improvement.

• Progress toward completing the agreed-upon actions.

Example:

After completing internal and external QAIP assessments, the CAE of

Global-Tech Manufacturing presents a summary to the board. The report
highlights that 90% of audits conformed to Standards, while a few lacked
sufficient evidence of supervisory review. The CAE shares an action plan
to include mandatory checklists and implements periodic supervisory spot
checks.

8. Discuss Standard 8.4: External Quality Assessment?

Standard 8.4: External Quality Assessment states the

requirements for an external quality assessment.

The core requirements of an external quality assessment are the

following:

• The CAE must arrange an external review of the internal audit

function at least every 5 years.

• The CAE may use a self-review instead, but only if it is approved

by an independent, qualified professional evaluator.

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o When choosing an evaluator, the CAE must ensure that at

least one team member holds an active Certified Internal
Auditor® (CIA®) certification.

• The CAE works with the board and senior management to

determine the scope of the external assessment.

The board approves the external assessment and must see the
results.

The complete results of the external quality assessment or self-

assessment with independent validation must be sent directly
to the board from the assessor.

• The board also approves the CAE’s action plans to address any
identified deficiencies and opportunities for improvement.

The board approves a timeline for the completion of the action

plans.

Example:

BrightPath University schedules an external quality assessment of its

internal audit department. The board selects an independent team that
includes a CIA-certified member with experience in higher education. The
assessment identifies strengths in audit execution but notes insufficient
stakeholder feedback mechanisms. The board approves the CAE’s action
plan to introduce post-audit surveys and track responses.

Mnemonic: "𝐑𝐄𝐀𝐂𝐓 𝟓"

 R – Results communicated to the board.

 E – Evaluator must be CIA-qualified.
 A – Action plans reviewed and approved by the board.
 C – CAE arranges the review.
 T – Team must be independent and qualified.
 5 – Every 5 years minimum (or sooner if major changes occur).

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9. Mention the reasons to conduct an External Assessment
more frequently than every 5 years?

The board and the CAE may determine that it is appropriate to

conduct an external assessment more frequently than every 5
years. Reasons for this include, but are not limited to:

• Changes in leadership.

• Significant changes in internal audit methodologies.

• Significant staff turnover.

10. Assess the Recommended Comprehensive Review?

Standard 8.4 recommends that the external quality assessment

include a comprehensive review of the adequacy of the internal
audit function’s:

• Conformance with the Global Internal Audit Standards

(Standards).

• Mandate, charter, strategy, methodologies, processes, risk

assessment, and internal audit plan.

• Compliance with applicable laws and/or regulations.

• Performance measures and assessment results, including

productivity and ability to meet deadlines.

• Competencies and due professional care, including the use of

tools and techniques, and a focus on continuous learning and
improvement.

• Qualifications, including those of the CAE role.

• Positioning within the organization’s governance structure and

how effective this positioning is in ensuring the function can
operate independently.

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• Surveys.

• Interviews.

Example:

At Ocean View Hotels, the audit department tracks:

• Quantitative: Number of audits completed (15 of 18 planned), average

days per audit (22).
• Qualitative: Post-audit survey shows 87% of managers found audit
insights helpful and actionable. The CAE uses this data to assess
resource needs for the next year.

40. Demonstrate the Key Metrics in assessing the performance of

Internal Audit?

• Financial metrics generally include measuring the efficiency

of the internal audit function (hourly cost), actual internal audit
costs versus projection, and monetary benefit recognized
(internal audit costs offset by operational savings).

• Operational metrics include monitoring the time required to

complete an audit compared to time budgeted for the audit,
planned audits (quantity of audits, key risks audited) compared
to actual quantity of completed audits and risks addressed, and
number of audit findings by audit.

• Quality metrics involve assessing audit work compliance with

audit standards and procedures and tracking the number of
audit findings versus same or similar findings per other audits
to assess whether management’s game plan (if one exists) to
correct the findings is effective.

• Productivity metrics provide the type of data that illustrate

each auditor’s workload capacity, time spent on each audit, and
average downtime of the auditors.

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• Efficiency metrics include measures such as auditor work
hours logged compared to the number of audit findings, use of
technology to perform audit work, and time utilized to assess
findings and generate audit reports.

• Effectiveness metrics consist of measuring the impact of

audit recommendations and management’s response to the
recommendations on an organization’s operations (including
the perception of the internal audit function by stakeholders).

Example:

Clear Sky Airlines uses the following metrics:

• Financial: Cost per audit hour is $85 vs. budgeted $90.

• Operational: 95% of audits completed on schedule.
• Quality: 98% of working papers passed supervisory review.
• Productivity: Each auditor averaged 6 audits per year.
• Efficiency: Audit reporting turnaround improved from 12 to 8 days.
• Effectiveness: 75% of recommendations led to improved operational
controls.

Mnemonic: "𝐅𝐎𝐐𝐐𝐏𝐄𝐄"

 F – Financial metrics.
 O – Operational metrics.
 Q – Quality metrics.
 Q – Quantitative measures.
 P – Productivity metrics.
 E – Efficiency metrics.
 E – Effectiveness metrics.

41. What is Deming Cycle?

The Deming Cycle (or Plan-Do-Check-Act Cycle) can be used to

establish the QAIP in a planned, methodical manner. It is a
continuous improvement model popularized by W. Edwards
Deming.

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42. Illustrate the Steps of Deming Cycle?

The Deming Cycle consists of four steps:

1) Plan establishes standards and expectations for operating

a process to meet goals.

2) Do executes the process and collects data for further

analysis in the later steps.

3) Check compares actual results with expected results and

analyzes the difference.

4) Act provides feedback by identifying and implementing

improvements to the process.

Example:

The internal audit function at Delta Engineering adopts the Deming Cycle:

• Plan: Set audit objectives and compliance benchmarks.

• Do: Execute audits and collect process data.
• Check: Review if audits meet quality benchmarks.
• Act: Update audit programs based on lessons learned and stakeholder
feedback. This cycle drives refinement of their QAIP annually.

Mnemonic: "𝐏𝐃𝐂𝐀"

 P – Plan: Define standards/goals.

 D – Do: Execute and gather data.
 C – Check: Compare results.
 A – Act: Implement improvements.

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SECTION C – QUALITY OF THE INTERNAL AUDIT

FUNCTION (WEIGHTAGE 15%)
TRUE FALSE QUESTIONS AND ANSWERS
S.No Questions Answers
1. The QAIP must TRUE. Standard 8.3 requires that the
cover all aspects of QAIP be comprehensive, including all
the internal audit activities and services provided by the
function. internal audit function.

2. External FALSE. Standard 8.4 requires external

assessments must quality assessments at least every five
occur at least every years.
three years.
3. The CAE must TRUE. This promotes transparency and
communicate supports governance responsibilities.
internal quality
assessment results at
least annually to the
board and senior
management.
4. A QAIP must include TRUE. These two types of assessments are
both internal and essential components of the QAIP
external structure.
assessments.
5. Only ongoing FALSE. Both ongoing and periodic
assessments are internal assessments are required
needed in a QAIP. under the QAIP.

6. External quality TRUE. To ensure objectivity and

assessments must be competence in evaluation.
conducted by a
qualified,
independent
assessor or
assessment team.
7. The QAIP includes TRUE. These are two of the five core
disclosure of components of a QAIP.
nonconformance

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SECTION C – QUALITY OF THE INTERNAL AUDIT

FUNCTION (WEIGHTAGE 15%)
FILL IN THE BLANKS
S.No Fill in the Blanks
1. The __________ must develop, implement, and maintain a
quality assurance and improvement program that covers all
aspects of the internal audit function.

2. The purpose of a __________ is to enable an evaluation and

promotion of the internal audit function’s conformance with the
Standards.

3. The two types of assessments required by a QAIP are

__________ and __________ assessments.

4. The QAIP must include five components: internal assessments,

external assessments, communication of QAIP results, proper use
of a __________, and disclosure of nonconformance.

5. At least __________, the CAE must communicate the results of

the internal quality assessment to the board and senior
management.

6. The CAE’s communications must include the scope, frequency,

and results of quality assessments, action plans for deficiencies,
and progress toward __________.

7. According to Standard 8.4, an external quality assessment must

be performed at least every __________ years.

8. A __________ assessment must be approved by an

independent, qualified professional evaluator.

9. At least one team member of the external assessment team must

hold an active __________ certification.

10. The board must approve the scope and results of the
__________ quality assessment and any related action plans.

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SECTION C – QUALITY OF THE INTERNAL AUDIT

FUNCTION (WEIGHTAGE 15%)
FILL IN THE BLANKS – ANSWER KEY
1. Chief audit executive. 2. Quality assurance and
improvement program (QAIP).
3. Internal, external. 4. Conformance statement.
5. Annually. 6. Completing agreed-upon
actions.
7. Five (5). 8. Self-review.
9. Certified Internal 10. External.
Auditor (CIA).
11. Internal. 12. Senior management, the board.
13. Ongoing monitoring. 14. Comprehensive.
15. Global Internal Audit 16. Board, senior management.
Standards.
17. Impact of 18. Performance.
nonconformance.
19. Target range. 20. Numerical (or computable).
21. Questionnaires. 22. Effectiveness.
23. Deming. 24. Check.
25. Do.

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SECTION C – QUALITY OF THE INTERNAL AUDIT

FUNCTION (WEIGHTAGE 15%)
ONE WORD ANSWER QUESTIONS
S.No Questions
1. What program is designed to evaluate and promote conformance
with the Standards?
2. Who is responsible for developing and maintaining the QAIP?
3. What type of assessment must be conducted at least every five
years?
4. What type of assessment includes ongoing monitoring and periodic
self-reviews?
5. What standard requires that the internal audit function conforms
to the Standards?
6. What standard governs the CAE’s responsibility for QAIP
implementation?
7. What standard covers external quality assessments?
8. What designation must at least one member of the external
assessment team hold?
9. What process is used as an alternative to an external assessment?
10. What standard requires internal quality assessments?
11. What type of monitoring involves feedback and checklist reviews?
12. What kind of action plan must be developed to address
nonconformance?
13. What rating indicates that the internal audit function is aligned
with the Standards?
14. What is the highest rating for conformance evaluation in QAIP?
15. What must the CAE communicate to the board and senior
management annually?
16. What must be disclosed if the internal audit function fails to meet
a Standard?

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SECTION C – QUALITY OF THE INTERNAL AUDIT

FUNCTION (WEIGHTAGE 15%)
ONE WORD ANSWER QUESTIONS – ANSWER KEY
1. QAIP. 2. CAE.
3. External. 4. Internal.
5. 4.1 6. 8.3
7. 8.4 8. CIA.
9. Self-assessment. 10. 12.1
11. Ongoing. 12. Corrective.
13. Conforms. 14. Generally.
15. Results. 16. Nonconformance.
17. Rationale. 18. Communication.
19. 15.1 20. Scope.
21. QAIP. 22. Integrity.
23. Transparency. 24. Objectives.
25. KPIs. 26. 12.2
27. Deming. 28. Plan.
29. Act. 30. Quantitative.
31. Qualitative. 32. Efficiency.
33. Quality. 34. Effectiveness.
35. Financial. 36. Operational.
37. Productivity.

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SECTION C – QUALITY OF THE INTERNAL AUDIT

FUNCTION (WEIGHTAGE 15%)
MATCHING QUESTIONS
Matching Quiz 1:
CLUE MATCH Answer
1. Internal Assessments. a. Reporting to senior
management and the
board on assessment
outcomes and
improvement plans.
2. External Assessments. b. Reviews performed by
qualified independent
assessors at least every 5
years.
3. Conformance c. Ongoing and periodic
Statement. evaluations conducted
within the internal audit
function.
4. Communication of d. Statement that indicates
Results. the audit activity adheres
to the IIA Standards.
5. Disclosure of e. Revealing when internal
Nonconformance. audit fails to meet
Standards and its impact.

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Answer Key for Matching Quiz 1:
ANSWERS
1. c
2. b
3. d
4. a
5. e

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Matching Quiz 11:

CLUE MATCH Answer
1. Board of Directors. a. Works with CAE to
approve scope and
timeline of external
assessments.
2. Senior Management. b. Oversees internal audit
function’s overall
effectiveness and quality
reporting.
3. Chief Audit Executive c. Provides feedback that
(CAE). helps improve audit
service delivery.
4. External Assessor. d. Responsible for
developing and
maintaining QAIP and
disclosing results.
5. Internal Audit Clients. e. Must be independent,
qualified, and free of
conflicts of interest.

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Answer Key for Matching Quiz 11:

ANSWERS
1. b
2. a
3. d
4. e
5. c

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SECTION C – QUALITY OF THE INTERNAL AUDIT

FUNCTION (WEIGHTAGE 15%)
MIND MAPS
❖ Elements of the Quality Assurance and Improvement
Program (QAIP)

• Purpose of QAIP

o Ensures internal audit function meets professional standards and

adds organizational value.

o Promotes efficiency, effectiveness, and continuous improvement.

• QAIP Components

o Internal Assessments.

o External Assessments.

o Communication of QAIP Results.

o Use of Conformance Statements.

o Disclosure of Nonconformance.

• Internal Assessments

o Ongoing Monitoring

▪ Continuous, built into daily supervision.

▪ Reviews planning, supervision, documentation, and tools.

▪ Collects feedback from audit clients.

▪ Uses KPIs: certifications, training hours, completion speed,

satisfaction.

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SECTION D – ENGAGEMENT RESULTS AND MONITORING

(WEIGHTAGE 45%)
KEY LEARNING OUTCOMES
From Findings to Follow-Up: Closing the Loop!
➢ Explain how to develop audit findings using criteria, condition,
cause, and effect.

➢ Describe the process of forming and discussing recommendations

with management.

➢ Evaluate whether to develop recommendations, request action

plans, or collaborate with management to agree on corrective
actions.

➢ Apply cost-benefit analysis to assess the feasibility and

effectiveness of recommendations.

➢ Resolve disagreements with management using a structured

methodology.

➢ Differentiate between favorable and unfavorable findings and how to

report each effectively.

➢ Demonstrate proficiency in root cause analysis to ensure sustainable

corrective actions.

➢ Identify and analyze inherent and residual risks relevant to

engagement objectives.

➢ Evaluate the alignment between residual risks and the organization’s

risk appetite and tolerance.

➢ Describe the risk assessment process, including risk identification,

analysis, evaluation, and treatment.

➢ Explain how to prioritize risks using qualitative and quantitative

tools such as heat maps and risk matrices.

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SECTION D – ENGAGEMENT RESULTS AND MONITORING

(WEIGHTAGE 45%)
STUDY POINTS

S.No Description
1. Elaborate on Standard 14.4: Recommendations and Action
Plans?

Internal auditors must determine whether to develop

recommendations, request action plans from management, or
collaborate with management to agree on actions to:

• Resolve the differences between the established criteria and the

existing condition.

• Mitigate identified risks to an acceptable level.

• Address the root cause of the finding.

• Enhance or improve the activity under review.

When developing recommendations, internal auditors must

discuss the recommendations with the management of the activity
under review.

If internal auditors and management disagree about the

engagement recommendations and/or action plans, internal
auditors must follow an established methodology to allow both
parties to express their positions and rationale and to determine a
resolution.

Example:

At a government-funded hospital, the internal audit team discovers that

procurement frequently bypasses vendor comparison requirements, leading
to inflated costs. The audit report outlines the criteria (policy requires three
vendor quotes), the condition (only one vendor used in 70% of sampled
purchases), the cause (lack of training and pressure to procure quickly), and
the effect (potential overspending of $200,000 annually).

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Recommendation: Train procurement staff and implement an

automated quote comparison system.

Action Plan: The procurement director agrees and allocates budget for
system implementation within 90 days.

Mnemonic: "𝐑𝐀𝐂𝐄 𝐭𝐨 𝐀𝐜𝐭"

 R - Resolve differences.
 A - Address root cause.
 C - Correct conditions.
 E - Enhance operations.
 To Act with collaboration and cost-benefit analysis.

2. Assess the role of Internal Auditors before finalizing

recommendations?

Before finalizing recommendations, internal auditors should

discuss the findings and potential recommendations or action
plans with the management authorized to make and oversee
changes to the activity under review.

• Internal auditors and management should discuss the feasibility

of the recommendations and/or action plans.

• There should be a cost-benefit analysis of the recommendation

and/or action plan.

• Evaluations also should determine whether the

recommendations adequately address the root cause of the
findings.

3. Describe Audit Report?

An audit report is a complete checklist.

It contains sections on all key topics that an internal auditor must

include.

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Each section explains what should happen and what is actually

happening.

The report has three main parts: what was done, what was found,
and what should now be done.

4. List the parts of an Audit Report’s findings and

recommendations?

• Criteria.

• Condition.

• Cause.

• Effect.

• Background information.

• Conclusion.

Mnemonic: "𝐂𝐫𝐚𝐳𝐲 𝐂𝐚𝐫𝐭𝐨𝐨𝐧 𝐂𝐡𝐚𝐫𝐚𝐜𝐭𝐞𝐫𝐬 𝐄𝐧𝐭𝐞𝐫𝐭𝐚𝐢𝐧 𝐁𝐨𝐫𝐞𝐝 𝐂𝐡𝐢𝐥𝐝𝐫𝐞𝐧"

 Crazy → Criteria (what should be).

 Cartoon → Condition (what is).
 Characters → Cause (why it happened).
 Entertain → Effect (impact of the issue).
 Bored → Background (context/info).
 Children → Conclusion (wrap-up/findings summary).

5. Define Criteria?

Criteria are the standards, measures, or expectations used in

making an evaluation (the correct state). Criteria form a
hypothesis.

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Example: Before issuing a payment voucher, the accounts payable
function should record a payable for inventory after reconciling
copies of the purchase requisition, purchase order, and receiving
report with the vendor invoice.

6. What is Condition?

Condition is the factual evidence that the internal auditor found in

the examination (the current state). It is what is actually observed
(audit findings) that proves or disproves the hypothesis.

Example: Accounts payable issued payment vouchers without

purchase requisitions. The cash disbursement function issued
checks for those transactions also without a purchase requisition.

7. What is Cause?

Cause is the reason for the difference between expected and actual
conditions. Recommendations should address cause.

Example: The purchasing function did not issue a purchase

requisition for 10 transactions.

8. Clarify Effect?

Effect is the risk or exposure the organization or others encounter

because the condition is not consistent with the criteria (the result
of the difference). The effect is the projection of the findings and
recommendations on the organization’s operations and financial
statements. In simplest terms, it is what happened.

Example: The 10 transactions not supported by full

documentation totaled $150,000, an amount material to the entity.

9. Explain Background Information?

Background information is generally provided in the final

communication. Examples include but are not limited to:

• Activities reviewed and the status of findings.

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• Recommendations from prior reports (can be used as a follow-

up source).

• Conclusions.

• Summaries of the communication’s content.

10. Explore Conclusion?

Findings and recommendations also may include client

accomplishments, related issues, and supportive information.

11. Distinguish between Favorable and Unfavorable Findings?

Favorable findings should be short and simple.

Unfavorable findings need further explanation.

12. Elaborate on Root Cause Analysis?

To maximize the value of the internal audit to the entity in the form
of actionable and effective recommendations to resolve adverse
audit findings, the internal auditor should investigate and assess
why the adverse findings occurred. The purpose is to address the
root cause(s) of the adverse findings.

The understanding of why the findings occurred is essential to

making effective recommendations for the prevention of further
occurrences. Rather than being satisfied with identifying the
immediate cause of the problem, the auditor should extend the
investigation to the contributing causes and ultimately to the root
cause(s).

Often, the identified root causes relate to several problems.

Recommendations addressing the root causes will have greater and
longer-lasting effects than recommendations that address only the
immediate cause.

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Example:

At an insurance company, management decided not to upgrade a legacy

claims system, despite repeated outages. The CAE, using a risk matrix,
classified this as a high operational risk. After discussions failed, the CAE
formally informed the board, which then overruled management and
approved the system upgrade.

111. Illustrate the role of CAE in Acceptance of Excessive Risk?

The CAE, in monitoring the disposition of results and associated

corrective actions, may become aware of high-risk findings that are
not being corrected in a timely manner or may represent a greater
risk than is acceptable to the organization. The CAE should use
effective tools to determine whether a given risk is unacceptable to
the organization. This process may include:

• The use of a risk matrix–a grid that plots the likelihood of risk
against its potential impact.

• Categorizing risks using scales such as low, medium, high, and

catastrophic based on their likelihood and impact.

• Using SWOT analysis (strengths, weaknesses, opportunities, and

threats) to identify risks to the organization and to determine
their acceptability.

• Quantitative methods such as VaR (value at risk), expected loss

calculation, sensitivity analysis, etc.

• Other methods such as the results of shareholder feedback and

benchmarking.

Mnemonic: "𝐑𝐞𝐚𝐥𝐥𝐲 𝐒𝐜𝐚𝐫𝐲 𝐑𝐢𝐬𝐤𝐬 𝐒𝐜𝐚𝐫𝐞 𝐕𝐞𝐫𝐲 𝐌𝐮𝐜𝐡"

 R – Risk matrix.
 S – SWOT Analysis.
 R – Risk categorization.
 S – Shareholder feedback.

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 V – VaR or other quantitative models.
 M – Market/Benchmark comparisons.

112. Identify the concerns with Management’s Acceptance of

Risk?

If the CAE determines that a risk is above the organization’s

tolerance and is not being acceptably mitigated, that assessment
must be communicated to senior management.

This action follows a discussion with the management of the area

of concern in an attempt to reach agreement on a satisfactory
resolution.

If the issue remains unresolved after these discussions, the CAE

communicates with the board.

113. List the types of risks beyond the Organization’s Tolerance

Level?

The types of risks that may be considered to be beyond the

organization’s tolerance level include:

• Those that may harm the organization’s reputation.

• Those that could harm people.

• Those that would result in significant regulatory fines,

limitations on business conduct, or other financial or contractual
penalties.

• Material misstatements.

• Fraud or other illegal acts.

• Significant impediments to achieving strategic objectives.

Mnemonic: "𝐑𝐄𝐀𝐋 𝐑𝐢𝐬𝐤 𝐑𝐞𝐪𝐮𝐢𝐫𝐞𝐬 𝐁𝐨𝐚𝐫𝐝’𝐬 𝐂𝐚𝐥𝐥"

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 R – Reputational damage.
 E – Ethical or legal violations.
 A – Adverse financial consequences.
 L – Life or safety threats.

114. Describe the Communication Methodology?

The internal audit function should have an agreement with the

board on methodologies for communicating risk concerns.

The methodology for communicating acceptance of risks may list

certain specifications, including:

• The timeliness of communicating.

• The hierarchy of reporting.

• Requirements for consultation with the organization’s legal

counsel or head of compliance.

Furthermore, the CAE must exercise judgment in determining

when and how best to communicate such matters.

The communication methodology also should include procedures

for documenting discussions with operational management. The
documentation should provide:

• The date of the discussion.

• A description of the risk and the reason for concern.

• Management’s reasons for not implementing the action plans

agreed upon or recommended.

• The manager responsible for accepting the risk.

Meetings with senior management and with the board also should
be documented, including the date of the meeting and minutes.

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SECTION D – ENGAGEMENT RESULTS AND MONITORING

(WEIGHTAGE 45%)
TRUE FALSE QUESTIONS AND ANSWERS
S.No Questions Answers
1. Internal auditors TRUE. Addressing root causes ensures
must address root long-lasting improvements, not just
causes in their superficial fixes.
recommendations.
2. A complete audit TRUE. These three parts are essential for
report includes what effective communication and follow-
was done, what was up.
found, and what
should now be done.
3. The condition in an FALSE. The condition describes what is
audit finding actually observed; the standard is the
describes the criteria.
standard that should
have been met.
4. Cause explains the TRUE. Identifying the cause is critical
reason behind the to proposing effective corrective
discrepancy between actions.
actual and expected
conditions.
5. Effect refers to the FALSE. Effect is the risk or exposure
cost of implementing resulting from the discrepancy, not
recommendations. implementation cost.

6. Recommendations TRUE. Depending on the context,

can be either general recommendations vary in scope and
or specific in nature. detail.

7. Management is not FALSE. Internal auditors must engage

required to management to finalize feasible action
participate in plans.
discussions of audit
findings.

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SECTION D – ENGAGEMENT RESULTS AND MONITORING
(WEIGHTAGE 45%)
FILL IN THE BLANKS
S.No Fill in the Blanks
1. The __________ of findings refers to the standards or
expectations used in making an evaluation.

2. The __________ is the factual evidence that the internal

auditor found in the examination.

3. The __________ is the reason for the difference between

expected and actual conditions.

4. The __________ is the risk or exposure the organization

encounters because the condition is not consistent with the
criteria.

5. Recommendations should address the __________ of a finding

to promote lasting improvement.

6. The standard that addresses the development of

recommendations and working with management to finalize
action plans is __________.

7. Internal auditors must determine whether to develop

recommendations, request action plans from management, or
__________ with management to agree on actions.

8. Before finalizing recommendations, auditors should conduct a

__________ analysis to ensure efficient use of resources.

9. Recommendations are made to __________ and protect

organizational value.

10. Findings and recommendations may also include client

__________, related issues, and supportive information.

11. __________ risk is the portion of inherent risk that remains

after management executes its responses.

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CIA Part 3 Study Guide 2025

SECTION D – ENGAGEMENT RESULTS AND MONITORING

(WEIGHTAGE 45%)
FILL IN THE BLANKS – ANSWER KEY
1. Criteria. 2. Condition.
3. Cause. 4. Effect.
5. Root cause. 6. Standard 14.4
7. Collaborate. 8. Cost-benefit.
9. Enhance. 10. Accomplishments.
11. Residual. 12. Inherent.
13. Assurance. 14. Risk assessment.
15. Risk attitude. 16. Risk appetite.
17. Risk tolerance. 18. Fraud.
19. Risk map (or heat 20. Risk and control.
map).
21. Standard 15.2 22. Accept.
23. Risk-based. 24. Action plan.
25. Escalation. 26. Escalating.
27. Directly. 28. Report.
29. Assessing. 30. Status.
31. Results. 32. Timely.
33. Final. 34. Chief audit executive (CAE).
35. Date. 36. Judgment.
37. Assurance. 38. Exit conference.
39. Risk. 40. Collaborative.
41. Communicating. 42. Generalized.
43. Objective. 44. Significant.
45. Concise. 46. Final engagement
communication.
47. Communication. 48. Senior management and the
board.

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CIA Part 3 Study Guide 2025

SECTION D – ENGAGEMENT RESULTS AND MONITORING

(WEIGHTAGE 45%)
ONE WORD ANSWER QUESTIONS
S.No Questions
1. What type of analysis helps identify the fundamental reason for
audit findings?
2. What term refers to the standards or expectations used in making
an evaluation?
3. What is the current state observed during an audit examination?
4. What is the risk or exposure resulting from differences between
actual and expected conditions?
5. What analysis helps assess whether the benefits of a
recommendation exceed its costs?
6. What is the process used to understand why an audit issue
occurred?
7. What document outlines steps to address audit findings?
8. What analysis considers benefits forgone due to resource
allocation choices?
9. What Standard addresses recommendations and action plans in
the International Standards for the Professional Practice of
Internal Auditing?
10. What term refers to the remaining risk after risk responses are
implemented?
11. What risk exists before any controls are applied?
12. What term refers to how much risk an organization is willing to
accept in pursuit of its objectives?
13. What term refers to acceptable variations in performance relative
to objectives?
14. What is the organization's approach toward risk-taking called?
15. What standard addresses engagement risk assessment?

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CIA Part 3 Study Guide 2025

SECTION D – ENGAGEMENT RESULTS AND MONITORING

(WEIGHTAGE 45%)
ONE WORD ANSWER QUESTIONS – ANSWER KEY
1. Cause. 2. Criteria.
3. Condition. 4. Effect.
5. Cost-benefit. 6. Root.
7. Recommendation. 8. Opportunity.
9. 14.4 10. Residual.
11. Inherent. 12. Appetite.
13. Tolerance. 14. Attitude.
15. 13.2 16. Control.
17. Heatmap. 18. Control.
19. Assessment. 20. Heatmap.
21. Follow-up. 22. 15.2
23. Monitoring. 24. Follow-up.
25. Escalation. 26. Spreadsheet.
27. Audit. 28. Engagement.
29. Objective. 30. Accurate.
31. Clear. 32. Concise.
33. Constructive. 34. Complete.
35. Timely. 36. Interim.
37. 11.4 38. CAE.
39. Exit. 40. Report.
41. CAE. 42. Distribution.
43. Summary. 44. Whistleblowing.
45. Plan. 46. Minutes.
47. 11.5 48. CAE.
49. Matrix. 50. SWOT.
51. Unacceptable. 52. Board.

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CIA Part 3 Study Guide 2025

SECTION D – ENGAGEMENT RESULTS AND MONITORING

(WEIGHTAGE 45%)
MATCHING QUESTIONS
Matching Quiz 1:
CLUE MATCH Answer
1. Criteria. a. The risk or exposure the
organization faces due to
the gap between what
should be and what is.
2. Condition. b. The standards or
expectations used to
evaluate evidence (e.g.,
policies or regulations).
3. Cause. c. Specific actions proposed
to correct findings and
improve operations.
4. Effect. d. The factual evidence
found during the audit.
5. Recommendation. e. The reason for the
discrepancy between the
expected and actual
conditions.

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CIA Part 3 Study Guide 2025

Answer Key for Matching Quiz 1:

ANSWERS
1. b
2. d
3. e
4. a
5. c

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CIA Part 3 Study Guide 2025

Matching Quiz 22:

CLUE MATCH Answer
1. Escalation. a. Internal auditor's
decision on whether to
notify senior
management or board
about risk issues.
2. Risk Tolerance. b. Written record of
meetings, reasons for
risk acceptance, and
responsible personnel.
3. Documentation. c. The process of informing
the board when senior
management fails to
resolve excessive risk.
4. Risk Categories. d. Ranges from low to
catastrophic based on
likelihood and impact.
5. CAE Judgment. e. The level of risk the
organization is willing to
accept.

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CIA Part 3 Study Guide 2025

Answer Key for Matching Quiz 22:

ANSWERS
1. c
2. e
3. b
4. d
5. a

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CIA Part 3 Study Guide 2025

SECTION D – ENGAGEMENT RESULTS AND MONITORING

(WEIGHTAGE 45%)
MIND MAPS
❖ Auditor Recommendations and Management Action Plans

o Internal auditors report findings based on criteria, condition, cause,

and effect.

o Recommendations should address root causes, not just symptoms.

o Recommendations can be general or specific, aiming to enhance

value.

o Internal auditors must collaborate with management to finalize

action plans.

o Use cost-benefit analysis to evaluate feasibility and prioritize

actions.

o Disagreements with management should follow established

resolution processes.

• Audit reports must include

o Criteria (what should be).

o Condition (what is).

o Cause (why the issue occurred).

o Effect (impact on organization).

o Recommendation (corrective steps).

o Corrective Action Taken (if completed during audit).

o Root Cause Analysis is essential for long-term solutions:

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