Final exam prep (ch. 2-3, 7 & 9, simulated audit, three lines of defense reading)

Final exam prep (ch. 2-3, 7 & 9, simulated audit, three lines of defense reading) 1st line of defense (operational mgt) mgt controls and internal control measures (senior mgt served; operational managers own and manage risk, responsible for implementing corrective actions to address process and control deficiencies 2nd line of defense (risk mgt and compliance functions) financial control, security, risk mgt, quality, inspections, compliance (senior mgt served) 3rd line of defense (internal audit) internal audit; beneficial because provides a higher level of independence than the 2nd lin eof defense (senior mgt and governing body/board/audit committee served) chapter 2 international professional practices framework (IPPF) IPPF elements mission above all; mandatory guidance (core principles, definition, code of ethics, and standards) and then recommended guidance (implementation guidance, supplemental guidance) mission of internal audit "to enhance and protect organizational value by providing risk-based and objective assurance, advice, and insight"-- do this through the audit report and must provide value!! 3 types of activities of IA 1)risk based and objective assurance 2) risk based and objective advice 3) risk based and objective insight efficiency and effectiveness? core prinicples 1- articulate the key elements that describe (in a doc) IA effectiveness and support the principles based standards and code of ethics 2- are fundamental truths or propositions that serve as the foundation for a system of belief or behavior or a chain of reasoning 3- taken as a whole, articulate IA effectiveness 4- to be considered effective, all principles should be present and operating effectively 5- how the IA function demonstrates achievement of the principles may be quite different (wiggle room) 6-failure to achieve any of the principles implies that an IA function was not as effective as it could be in achieving its mission they are as follows: -demonstrates integrity -demonstrates competence and due professional care -is objective and free form undue influence (independent) -aligns w strategies, objectives, and risks of the org (IAs value, mission, and vision statements should match those of the org) -is appropriately positioned (important for independence) and adequately resourced -demonstrates quality and continuous improvement -communicates effectively -provides risk based assurance -insightful, proactive, and future focused (audit plan for next yr) -promotes org improvement definition of IA IA is an independent, objective assurance and consulting activity designed to add value and improve an org's operations. it helps an org accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk mgt, control and governance processes code of ethics 1) integrity-- establishes trust providing basis for reliance on auditor's judgement 2)objectivity (free from bias of what youre auditing, not the company) 3) confidentiality 4) competency (training, certifications, etc.) rules of conduct are the set of behavior norms that the internal auditor should follow to put these 4 principles into practice purpose of the standards for the IPPF guide adherence w the mandatory elements of the framework, provide framework for performing and promoting internal audit, establish basis for evaluating internal audit performance, foster and promote org processes and operations standards