Assessing the effectiveness of management's self-assessment activities in the context of risk management requires a thorough examination of the processes that management uses to monitor and control risks. The most effective way to evaluate these activities is to observe and test the control and monitoring procedures in place.
Detailed Explanation:
IIA Standard 2130 - Control:
This standard highlights the internal audit activity's responsibility to assess whether the organization's controls are adequate to manage risks. Observing and testing controls directly is the most effective way to determine their operational effectiveness.
IIA Practice Advisory 2130-1:
The advisory recommends that internal auditors should focus on the design and effectiveness of control activities. Observing and testing controls ensures that the auditor can verify whether management's self-assessments accurately reflect the risk environment.
Effectiveness of Risk Management Processes:
To assess the effectiveness of self-assessment, internal auditors need to ensure that the procedures for identifying, assessing, and monitoring risks are robust. Direct observation and testing provide tangible evidence of how these processes are functioning.
Why Not Other Options?
Option A (Reviewing corporate policies and board minutes): This provides context but does not directly assess the effectiveness of control procedures.
Option B (Conducting interviews): Interviews can provide insights but are subjective and may not reflect actual control effectiveness.
Option C (Researching industry information): This helps in understanding risks but does not assess how well the organization manages those risks.
Conclusion: Option D is correct as it involves the direct evaluation of the effectiveness of control and monitoring procedures, aligning with IIA's guidance on assessing risk management processes.