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IIA CIA Exam
Certified Internal Auditor Exam (Page 29 )

Updated On: 12-Feb-2026
Page 29 of 342
PDF with 1702 Questions

Which of the following statements regarding organizational governance is not correct?

  1. An effective internal audit function is one of the four cornerstones of good governance.
  2. Those performing governance activities are accountable to the customer.
  3. Accountability is one of the key elements of organizational governance.
  4. Governance principles and the need for an internal audit function are applicable to governmental and not-for-profit activities.

Answer(s): B



Why is the concept of residual risk important?

  1. Because residual risk is difficult to measure.
  2. Because residual risk is all of the risk that remains after controls are established.
  3. Because the cost-benefit analysis supporting control design is part of the measure of residual risk.
  4. Because the risk that remains after control design and implementation needs to be acceptable to senior management.

Answer(s): D



A major difference between enterprise risk management and traditional risk management lies in the narrow focus of traditional risk management on

I). Property and liability risks.
II). Risks with insurance solutions.
III). Risks impacting organizational objectives.

  1. I and II only.
  2. I and III only.
  3. II and III only.
  4. I, II, and III.

Answer(s): A



When an external auditor unknowingly fails to modify an opinion on financial statements that are materially misstated, this is an example of

  1. An inherent risk.
  2. A control risk.
  3. An audit risk.
  4. A residual risk.

Answer(s): C



In the annual audit of the financial statements of a company with high inherent risk and a very strong control system, the external auditor may be able to allow detection risk to rise because

  1. Audit risk has been reduced.
  2. Control risk has been assessed at a lower level.
  3. The company's operations are very susceptible to misstatements.
  4. Whenever inherent risk is high, control risk is disregarded.

Answer(s): B






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