Questions and Answers of Internal Auditing Assurance

Independent outside auditors provide financial reporting assurance services primarily for:a. The benefit of third parties.b. Management.c. Board of directors.d. The CEO.
Ina Icandoit has an 8:00 a.m. class each day. The professor has instilled in the students the importance of getting to class on time, so Ina has made this one of her objectives for the semester. What
What are the four categories of business objectives discussed in this chapter?
What are the definitions of governance, risk management, and control provided in this chapter?
AVF Company’s new CFO has asked the company’s CAE to meet with him to discuss the role of the internal audit function. The CAE should inform the CFO that the overall responsibility of
Which of the following statements is not true about business objectives?a. Business objectives represent targets of performance.b. Establishing meaningful business objectives is a prerequisite to
Discuss:a. The inherent personal qualities common among successful internal auditors.b. The knowledge, skills, and credentials entry-level internal auditors are expected to possess.c. Additional
What is the difference between independence and objectivity as they pertain to internal auditors?
What is the difference between internal assurance services and internal consulting services?
Within the context of internal auditing, assurance services are best defined as:a. Objective examinations of evidence for the purpose of providing independent assessments.b. Advisory services
Which of the following is mandatory guidance within the IPPF?a. Implementation guidance.b. Supplemental guidance.c. The value proposition.d. The core principles.
What are the three fundamental phases in the internal audit engagement process?
Which of the following is recommended guidance within the IPPF?a. The Definition of Internal Auditing.b. The Standards.c. Supplemental guidance.d. None of the above.
What is the relationship between auditing and accounting?
The Internal Audit Foundation exists to help audit leaders, practitioners, students, and academics experience continuous growth in their careers to propel them to become:a. Strong assurance
What is the primary difference between internal and external financial reporting assurance services?
Which of the following is one of the 5 Cs essential to success as an internal auditor?a. Courage.b. Consistency.c. Collaboration.d. Candidness.
What are some of the factors that have fueled the dramatic increase in demand for internal audit services over the past 30 years?
Which of the following is a framework that can help individual internal auditors and internal audit functions assess their current competency levels and identify areas for improvement?a. Internal
What types of procedures might an internal auditor use to test the design adequacy and operating effectiveness of governance, risk management, and control processes?
Internal auditors must have competent interpersonal skills. Which of the following does not represent an attribute of interpersonal skills?a. Communication.b. Leadership.c. Project management.d. Team
What is co-sourcing? Why might an organization choose to co-source its internal audit function?
While planning an internal audit, the internal auditor obtains knowledge about the auditee to, among other things:a. Develop an attitude of professional skepticism about management’s assertions.b.
How is The IIA’s leadership organization structured?
Which of the following is the premier certification sponsored by The IIA?a. Certification in Control Self-Assessment.b. Certified Internal Auditor.c. Certification in Risk Management Assessment.d.
What are the two categories of guidance included in the IPPF?
Which of the following is the ultimate position of a career internal auditor?a. CEO.b. CFO.c. CRO.d. CAE.
What are the three parts of the CIA exam?
What is the major objective of the Internal Audit Foundation?
What are the character traits, known as the 5 Cs, that are required for success in the internal audit profession?
What are the seven inherent personal qualities listed in the chapter that are common among successful internal auditors?
Why is it imperative that internal auditors have integrity?
How many core competencies are included in The IIA’s Global Internal Auditor Competency Framework and for what general job levels are they recommended?
What are the three common ways individuals enter the internal audit profession?
Do most people who work in internal auditing spend their entire careers there? Explain.
What options does an individual have if he or she chooses to be a career internal auditor?
What are the circumstances that precipitated the need for internal audit-type activities?
A primary purpose of the Standards is to:a. Promote coordination of internal and external audit efforts.b. Establish a basis for evaluating internal audit performance.c. Develop consistency in
Why is it important for a profession, such as internal auditing, to promulgate standards?
What are the six components of the IPPF? Which components constitute mandatory guidance? Which components constitute recommended guidance?
Which of the following are “mandatory guidance” in The IIA’s IPPF?I. Implementation Guides.II. The Code of Ethics.III. The Definition of Internal Auditing.IV. The Standards.a. I, II, and IV.b.
According to the Standards, which of the following must the internal audit manager think about when considering appropriate due care while planning an assurance engagement?a. The opportunity to
Explain what is meant by the term “conflicts of interest.” How do conflicts of interest arise?
Which of the following types of IPPF guidance require(s) public exposure?I. A new Implementation Guide.II. A new standard.III. New Supplemental Guidance for auditing cybersecurity.IV. A new
What does “proficiency” mean? What does “due professional care” mean?
Which of the following are required of the internal audit function per the Standards?a. Evaluate the effectiveness of the audit committee annually.b. Issue an overall opinion on the adequacy of the
What is the purpose of the internal audit function’s quality assurance and improvement program?
Which of the following is a Core Principle for the Professional Practice of Internal Auditing?a. Maintain confidentiality.b. Promote an ethical culture in the internal audit profession.c. Develop
What are the seven main sections of the Performance Standards?
As indicated in the Standards, the internal audit function must be independent, and internal auditors must be objective in performing their work. As indicated in the chapter reading, independence and
“The IIA’s Code of Ethics,” and answer the following questions:a. Why is it important for the internal audit profession to have a code of ethics?b. How do the Code of Ethic’s Principles
Contrast the mission statement with the Definition of Internal Auditing. What, if anything, does the mission statement add?
An internal auditor provides income tax services during the tax season. For which of the following activities would the auditor most likely be considered in violation of The IIA’s Code of Ethics?a.
How does The IIA’s Code of Ethics differ from the Standards in governing the behavior and activities of internal auditors?
What is the purpose of The IIA’s Code of Ethics?
An internal auditor is auditing a division in which the division’s chief financial officer (CFO) is a close, personal friend. The auditor learns that the friend is to be replaced after a series of
Does including the CAE in a company’s stock option program violate either The IIA’s Code of Ethics or the Standards? Explain your answer.
Identify the four principles of the Code of Ethics. Why should internal auditors strive to comply with these principles?
The IIA’s Standards require internal auditors to exercise due professional care while conducting assurance engagements. Which of the following is not something an internal auditor is required to
The CAE for Sargon Products reports administratively to the CFO and functionally to the audit committee. The scope of the internal audit function assurance services includes financial, operational,
What is the purpose of The IIA’s Standards? Explain the difference between Attribute and Performance Standards.
In which of the following situations does the internal auditor potentially lack objectivity?a. A payroll accounting employee assists an internal auditor in verifying the physical inventory of small
Review IG 1000/Purpose, Authority, and Responsibility and answer the following questions.a. Why is it important for an internal audit function to have a charter?b. What information should an internal
Explain the difference between assurance and consulting services. Why does each type of service have its own Implementation Standards?
Which of the following is/are components of the Standards?I. Statements.II. Interpretations.III. Glossary.a. I only.b. I and II.c. I and III.d. I, II, and III.
You are part of a three-person internal audit function that was asked by your company’s CEO to conduct an audit of the internal controls over the company’s commodities trading and hedging
What is the definition of independence as it pertains to an internal audit function? What is the definition of objectivity as it pertains to individual internal auditors?
According to the Standards, how is the independence of the internal audit function achieved?a. Staffing and supervision.b. Organizational status and objectivity.c. Human relations and
Identify the Performance Standards that pertain specifically to:a. Engagement planning.b. Performing the engagement.c. Communicating results.
What is the relationship between Standards and the Implementation Guidance?
To determine what needs to be done regarding follow-up on an assurance engagement the internal audit staff just completed, one would consult:a. The Attribute Standards: Assurance Services
What is the role of Supplemental Guidance in the IPPF?
In addition to the Standards, some internal audit departments follow other standards in conducting their work, either because of regulatory requirements or by choice. When these other standards are
Which of the following would be a violation of The IIA’s Code of Ethics?a. An internal auditor was subpoenaed in a court case in which a joint venture partner claimed to have been defrauded by the
What are the responsibilities of The IIA’s Professional Practices and Professional Guidance Advisory Councils?
What is the role of the IPPF Oversight Council?
Why are there arrows flowing in both directions between the different elements of governance depicted in exhibit 3-2?Exhibit 3-2 DEPICTION OF KEY ELEMENTS OF A
What organizations, other than The IIA, promulgate guidance that is pertinent to internal auditors?
Which of the following is not an appropriate governance role for an organization’s board of directors?a. Evaluating and approving strategic objectives.b. Influencing the organization’s
Describe ways in which an organization’s business model may affect its approach to governance oversight. Provide examples that contrast publicly held companies from privately held companies.
Visit the website http://www.ecgi.org/codes/all_codes.php, which contains a list of governance codes from around the world. Review the governance regulations for Australia, South Africa, and the
What is the OECD’s definition of corporate governance?
Which of the following are typically governance responsibilities of senior management?I. Delegating its tolerance levels to risk managers.II. Monitoring day-to-day performance of specific risk
What is the difference between the two areas of governance depicted in exhibit 3-3?Exhibit 3-3 OVERVIEW OF GOVERNANCE GOVERNANCE "UMBRELLA" BOARD OF DIRECTORS STRATEGIC DIRECTION GOVERNANCE OVERSIGHT
Discuss why it is important, from a governance perspective, to have independent outside directors on a board of directors.
The IIA has different blogs on its website. One of these is a governance blog (https://iaonline.theiia.org/blogs/marks). Find this site on The IIA’s website and review the last three postings, as
ABC utility company sells electricity to residential customers and is a member of an industry association that provides guidance to electric utilities, lobbies on behalf of the industry, and
Given that directors typically do not interface directly with key stakeholders, how might a board of directors obtain an understanding of key stakeholder expectations? How might that process vary
What is The IIA’s definition of governance? How does this definition relate to the figure in exhibit 3-3?Exhibit 3-3 OVERVIEW OF GOVERNANCE GOVERNANCE "UMBRELLA" BOARD OF
Many organizations have multiple avenues for ensuring that they operate within their risk appetite. Organizations operating in a highly regulated environment in particular have a need to demonstrate
In exhibit 3-4, the internal audit function is included in the assurance box. In light of this assurance role, discuss the pros and cons of the chief audit executive (CAE) reporting to the board of
Who is responsible for establishing the strategic objectives of an organization?a. The board of directors.b. Senior management.c. Consensus among all levels of management.d. The board and senior
IT governance has become a “hot topic” in recent years. Using the governance framework shown in exhibit 3-4, customize each of the components to describe how they might specifically relate to
Who is ultimately responsible for identifying new or emerging key risk areas that should be covered by the organization’s governance process?a. The board of directors.b. Senior management.c. Risk
What are the three different types of stakeholders that the board must understand? Give examples of each type.
What types of outcomes might a board need to consider to understand stakeholders’ expectations?
The internal audit function should not:a. Assess the organization’s governance and risk management processes.b. Provide advice about how to improve the organization’s governance and risk
The General Auditor’s Office (GAO) of ABC jurisdiction issued a report on the XYZ Electric Cooperative, a large member-owned utility. This report reviewed the work of MNO Consulting. MNO found
Which of the following would not be considered a first line of defense in the Three Lines of Defense model?a. A divisional controller conducts a peer review of compliance with financial control
The CAE of PJS Company is working with senior management and the board to develop a combined assurance model and has asked you for advice. More specifically, he has asked you to respond to the

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