1Management and the board of directors are responsible for following up on observations and recommendations made by the external auditors. What role, if any, should the internal audit activity have in this process?

a.

The internal audit activity should establish a monitoring process to review the adequacy and effectiveness of managements follow-up actions.

b.

The internal audit activity should have no role in this process in order to ensure independence.

c.

The internal audit activity should only become involved if the chief audit executive has sufficient evidence that the follow-up is not occurring.

d.

2.The internal audit activity should become involved only if specifically requested by management or the board of directors.

The chief audit executive (CAE) of a midsize internal auditing organisation was concerned that management might outsource the internal auditing function. Therefore, the manager adopted a very aggressive program to promote the internal auditing department within the organization. The manager planned to present the results to management and the audit committee and recommend modification of the Internal Audit Charter after using the new program. The following lists six actions the audit manager took to promote a positive image within the organisation:

1. Audit assignments concentrated on economy and efficiency audits. The audits focused solely on cost savings, and each audit report highlighted potential costs to be saved. Negative findings were omitted. The focus on economy and efficiency audits was new, but the auditees seemed very happy.
2. Drafts of all audit reports were carefully reviewed with the auditee to get their input. Their comments were carefully considered when developing the final audit report.
3. The information technology auditor participated as part of a development team to review the control procedures to be incorporated into a major computer application under development.
4. Given limited resources, the audit manager performed a risk analysis to determine which locations to audit. This was a marked departure from the previous approach of ensuring that all operations are reviewed at least every three years.
5. To save time, the manager no longer required that a standard internal control questionnaire be completed for each audit.
6. When the auditors found that management and the auditee had not developed specific criteria or data to evaluate the operations of the auditee, the audit team was instructed to perform research, develop specific criteria, review the criteria with the auditee, and, if acceptable, use that criteria to evaluate the auditees operations. If the auditee disagreed with the criteria, negotiation took place until acceptable criteria could be agreed on. The audit report commented on the auditees operations in conjunction with the agreed-on criteria.

3.Which of the following elements of Action 1 taken by the audit manager would be considered a violation of the IIA Standards?

I. The type of audits was changed before modifying the charter and going to the audit committee.

II. Negative findings were omitted from the audit reports.

III. Cost savings and recommendations were highlighted in the report.

a.

I and II

b.

I and III

c.

II and III

d.

I only

4.The philosophy of King IV is focused on the following, except

a.

Integrated reporting.

b.

Stakeholder inclusivity.

c.

Corporate citizenship.

d.

Sustainable development.

5.The IIA Standards would not require the chief audit executive (CAE) to

a.

contribute resources for the annual audit of financial statements.

b.

communicate to senior management the results of evaluations of the coordination between internal and external auditors.

c.

coordinate audit work with that of the external auditors.

d.

communicate to senior management and the board the results of evaluations of the performance of external auditors.