Certified Internal Auditor (CIA) Practice Test

The effectiveness of internal controls is mainly assessed during which phase of the audit?

1. Planning phase

2. Fieldwork phase

3. Reporting phase

4. Follow-up phase

The correct answer is: Fieldwork phase

The effectiveness of internal controls is primarily assessed during the fieldwork phase of the audit. This is the stage where auditors gather evidence, perform tests, and examine the internal control systems in place to determine how well they are functioning. During fieldwork, auditors conduct various procedures to evaluate the design and operating effectiveness of internal controls. This can include walkthroughs, control testing, and substantive testing to assess whether the controls are adequately mitigating risks. In the planning phase, the auditor typically identifies risks and develops an audit strategy, but does not yet assess control effectiveness. The reporting phase involves summarizing findings and providing recommendations, which relies on the assessments made during fieldwork. The follow-up phase might check the implementation of recommendations but does not involve initial assessments of control effectiveness. Thus, fieldwork is critical for thoroughly evaluating how well internal controls work in practice.