Certified Internal Auditor (CIA) is a certification for accountants who perform internal audits. The designation can only be given by the Institute of Internal Affairs (IIA) and is accepted worldwide.

The CIA certification is similar in function to certified public accountants (CPAs). Both are trained in accounting; furthermore, some of their functions even overlap. However, someone with a CIA designation will have a much more focused skill set.

Another difference between the two is that CPA credentials are only recognized within the United States, while the CIA designation is recognized internationally. And although it is not very common, an accountant can hold both the CPA and CIA designations.

What Does A CIA Do

What Does A CIA Do?

CIAs test and evaluate internal control systems. This means they set up systems to prevent loss, theft, fraud, and damaged goods during business operations. They do so by reviewing effectiveness of management, regulation compliance, and safeguarding of assets.

Internal auditors also ensure that all financial data they work with is reliable and up to date. This includes reviewing monthly balance sheets, financial reports, and capital expenditures. Everything reviewed by an internal auditor must follow both internal policies and external regulations.

To put the position in simpler terms, CIAs help upper management mitigate risk and safeguard company assets.

Have a plan of attack for CPA

How can you earn the CIA certification?

Becoming CIA certified is a difficult process that requires several years to complete. You can find a detailed breakdown of all these steps below:


To qualify for the CIA exam, you must first ensure you have the proper education.

All CIA candidates must have a 4-year degree or higher from a university accredited by the IAA. You will be asked to prove this by providing either a copy of your degree or your official transcripts. Alternatively, you can qualify for the CIA exam if you have two years of college education and five years worth of work experience in internal auditing.

If you still wish to qualify for the CIA without any post secondary schooling, you need seven years of verified work experience in internal auditing. More on that below:

Work Experience

After completing the necessary education, you must then meet a work experience requirement.

Though you may apply for exams before meeting this requirement, you will not receive certification until you complete your work experience. How much experience is needed is dependent upon your maximum completed level of education.

The requirements for the program are:

Education Level Years of Required Work Experience (Internal Auditing or Equivalent)
Master’s Degree (or equivalent) 12 months
Bachelor’s Degree (or equivalent) 24 months
Associate’s Degree, three A-Level
Certificates, grade C or higher (or equivalent)
60 months

Source – Institute of Internal Auditors Eligibility Requirements

Character Reference

In order to meet with the strict moral and character requirements, all candidates require a Character Reference Form. It must be signed by a CIA, CCSA, CGAP, CRMA, CFSA, or other supervisor. This requirement ensures you have a high level of integrity to go along with your professionalism.

You can find the Character Reference Form here.

Take the CIA Exam

Once you have met the eligibility requirements for the CIA exam, the last step is to take and pass all three parts of the test.

The first part of the exam is Internal Audit Basics. It contains 125 questions and lasts 2½ hours. Topics tested include mandatory guidance from the IPPF, internal control and risk concepts, and tools and techniques for internal audit engagements.

Part two of the test is Internal Audit Practice, which has 100 questions and lasts 2 hours. It tests internal audit function management and the establishment of a risk-based plan. This part also tests students’ knowledge of the required steps for the management of individual engagements as well as fraud controls and risks.

The final portion of the CIA exam is the Internal Audit Knowledge Elements. Here you will be tested on governance and business ethics, risk management, and organizational structure. This portion is also 100 questions and is 2 hours long.

Recognize CPA Question Types

Recognize CPA Exam Question Types

To answer CPA exam simulations effectively, it’s important to understand the types of questions that are asked. If you’re familiar with these categories, you’ll be able to determine the purpose of the question quickly and answer them effectively.

  • Process Evaluation: The CPA exam asks questions about a particular business process and may require you suggest changes to improve the process. If you’re asked to analyze a manufacturing process, for example, you may find out that production slows when a certain vendor does not ship raw materials on time. The production process would improve if the company can find another vendor who can ship materials on time.
  • Analysis: You may be asked to analyze financial statement data, and to identify potential problems in the business. For example, if the percentage increase in accounts receivable is growing faster than the percentage growth in credit sales, a firm may eventually run short on cash.
  • Problem solving and judgment: The accounting profession requires the use of judgment; you may see simulation questions that require you to use judgment to support a point of view. If there is uncertainty about when to post an expense, for example, the accounting principle of conservatism requires a CPA to post the expense sooner, rather than later. You may be asked to apply that principle to a particular accounting transaction.

What’s the bottom line?

If you understand each of these question types, you can start to form your answer quickly!

Keep reading for more specific tips on CPA exam simulations:

Recognize Consistent use of Policies

Recognize Consistent Use Of Policies

Here’s another helpful hint:

A company must consistently use the same accounting policies each year in order for the financial statements to be comparable. For example, if a firm uses the first-in, first out (FIFO) method of accounting for inventory, they must stick with that method each year. In the same way, a business must use the same depreciation method from one year to the next.

You might be wondering: what does this have to do with my upcoming CPA exam?

There are some dead giveaways on exam questions when the issue of accounting policies is involved. For example, any change in policy should be a red flag to you. In most cases, a change in policy requires a company to report the impact on net income resulting from the change. So if a hypothetical firm changes from the FIFO inventory method to last-in, first out (LIFO) method, the impact on net income must be disclosed.

Understand relevant vs fixed costs

Understand Relevant vs. Fixed Costs

Both the FAR and BEC tests may ask questions regarding relevant costs: costs that may change based on a particular decision. Alternatively, they may ask about fixed costs, which aren’t relevant because they cannot be changed.

A good example of a relevant vs. fixed cost is a special order that comes into a business near the end of the month. These are different from fixed costs, such as the lease payment on a factory building, that have already been paid for using sales and profits generated earlier in the month. As a result, these fixed costs are not included as a cost when pricing a special order, making it a relevant cost.

Want to know the best part?

A firm may be able to reduce the price of a special order because fixed costs are not included.

Brush up on adjusting entries

Brush Up On Adjusting Entries

A FAR simulation question may ask you to post adjusting entries, which are required for accrual accounting. This is an area of confusion for exam candidates, so remember that an adjusting entry requires one income statement account and one balance sheet account.

If you owe $5,000 in payroll expenses in the last week of December, for example, and the payroll won’t be paid until early January of the next year, here is your adjusting entry:

  • Debit wage expense: $5,000 (Income statement account)
  • Credit accrued wages payable: $5,000 (Balance sheet account)

When payroll is paid in January, the wages payable account is debited (to remove the liability), and the cash account is credited to make the payment.

Remember to use one income statement account and one balance sheet account for adjusting entries. Consequently, you’ll be able to approach any relevant CPA simulations the right way.

Think Carefully About The CPA

Think Carefully

Simulation questions on the CPA exam can seem overwhelming, because they require more work than the multiple-choice items. But if you enter the exam with an understanding of the questions and a plan of attack, you can answer questions accurately.

Here’s a quick recap of the terms and concepts outlined above:

  • Process evaluations are a type of scenario commonly encountered when answering CPA exam simulations. After being given an example of a business’ process, you may be asked what can be done to improve it.
  • Accounting policies are consistent in the vast majority of cases. That means that any questions regarding the use of accounting policies will most likely require consistency with prior examples.
  • Relevant costs are business expenses that will increase or decrease based on variable factors.
  • Fixed costs, on the other hand, will remain the same consistently.
  • Adjusting entries is a component of accrual accounting. It requires an income statement account and a balance sheet account.

Thanks for reading and good luck on your upcoming CPA exams!

Kenneth W. Boyd is a former Certified Public Accountant (CPA) and the author of several of the popular "For Dummies" books published by John Wiley & Sons including 'CPA Exam for Dummies' and 'Cost Accounting for Dummies'.

Ken has gained a wealth of business experience through his previous employment as a CPA, Auditor, Tax Preparer and College Professor. Today, Ken continues to use those finely tuned skills to educate students as a professional writer and teacher.