When one applies to become a candidate in the CIDA program, the candidate agrees to abide by the terms and conditions of the CIDA program administered by the Investment Training and Consulting Institute Inc. and any professional organization co-sponsoring the CIDA exam in the future. These terms and conditions apply to eligibility, exam confidentiality, ethics and continuing professional development. CIDA candidates must meet the following eligibility requirements:

Education: CIDA candidates must hold a bachelor’s degree or its equivalent from an accredited college-level institution. Written proof of completion of degree must be furnished on request. Educational performance may be taken into consideration when a non-degree candidate has completed 80 percent of the academic requirements. Applicants who do not possess a bachelor’s degree should submit related educational/professional information with the application for review by ITCI’s certification committee. Information submitted should be sufficiently detailed to enable the Certification Committee to determine equivalency.

Character Reference: CIDA candidates must exhibit high moral and professional character and must submit a character reference signed by a Certified Internal Auditor (CIA), a CIDA or the candidate's supervisor.

Work Experience: Two years of acceptable audit experience is required before the CIDA designation can be awarded. Acceptable work experience must include at least one-year of extensive audit activities in the investment and\or derivative areas. This required experience can be accrued while the CIDA candidate is studying for the exam or after successful completion. Acceptable work experience must be verified by a Certified Internal Auditor (CIA), a CIDA or the candidate's supervisor.

Ethics: CIDA candidates agree to abide by the Code of Ethics established by the Institute of Internal Auditors (IIA). The Code of Ethics is available on the IIA’s Web site: www.theiia.org or by contacting the IIA’s Customer Service Center.

Continuing Professional Education: Upon certification, CIDAs will be required to maintain the knowledge, audit skills and stay informed of current developments in the investments and derivatives areas. CIDAs must acquire 15 hours of continuing professional education (CPE) per year in this highly specialized area and will report these hours annually upon request to ITCI. To acknowledge the study time required to successfully pass the CIDA exam, the CPE requirements are waived for the year the exam is passed.

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The CIDA exam will be administered in a multiple choice format (200 questions) and will have an established time limit of four hours. The exam content will be divided into two distinct sections:

• Understanding the Investment and Derivative Structures
• Auditing the Risks and Controls of Investment and Derivative Activity

The exam will cover the United States and International Securities. Questions can pertain to numerous industries (i.e., financial, commodity). Additionally, CIDA candidates should keep abreast of current market conditions as emerging issues can be a testing category on the CIDA exam.

To help CIDA candidates understand the question format of the CIDA exam, sample questions are provided in the next section. Other sample questions can be obtained by purchasing the study guide or by attending the spring CIDA review course offered on April 26-28, 2010. *Note: Fall 2010 CIDA review course dates will be determined soon.

The CIDA exam will be a non-disclosed examination, which means that current or past exam questions and answers will not be published or divulged. Candidates’ question booklets must be turned in with their answer sheets at the conclusion of the examination.

1. Financial instruments that are characterized by easy conversion to cash and come in the form of Treasury Bills, Money Market Mutual Funds and Certificates of Deposits are called:

A. Cash equivalents
B. Stocks
C. Derivatives
D. Zero-coupon Bonds

2. The act of reducing a loss by taking a position in derivatives that balances out or significantly reduces the risk of the current position held in the market is called:

A. Day trading
B. Speculation
C. Hedging
D. Position taking

3. Of the many internal control problems inherent in the Barings case, the one control weakness that is most evident is:

A. Access to the accounting system
B. No risk management reports
C. Lack of segregation of duties
D. Excessive positions in the market

4. A Swaption contract is:

A. A swap that has not reached effective date and is used in refinancing.
B. A contract that combines a swap and option and gives the buyer of the contract the right to enter into the swap but not the obligation.
C. A swap in which counterparties exchange floating rate cash flows.
D. A swap in which counterparties exchange floating rate cash flows based on two different countries.

5. A short call option written against a security that is already owned is termed a:

A. Covered Call
B. Naked Option
C. Collar
D. Lost Premium

6. Selling a call without upside protection and/or selling a put without downside protection is referred to as being:

A. Stripped
B. Naked
C. Hedged
D. Covered

Answers: Q1 = A, Q2 = C, Q3 = C, Q4 = B, Q5 = A, Q6 = B

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ITCI has published a study guide for the CIDA exam which covers the subject matters of the CIDA “Body of Knowledge” and also contains numerous sample questions. The guide will help CIDA candidates study for this comprehensive exam and serve as a reference for future investment and derivative audits. The comprehensive guide of over 350 pages, written by Barbara Davison, is brimming with investment and derivative auditing material. Over 90 percent of the pilot group indicated on a post-exam survey that they could not have passed the exam without the help of the study guide. The cost for the CIDA Study Guide is US $95.00 plus shipping and handling for CIDA Exam Applicants and US $165.00 plus shipping and handling for Non-CIDA Exam Applicants.

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