According to MA guidance, which of the following best describes how often the chief audit executive should review the quality assurance and improvement program of the internal audit activity?
According to IIA guidance, the chief audit executive should review the quality assurance and improvement program of the internal audit activity progressively on a day-to-day basis. This continual review ensures that the internal audit activity remains effective and aligned with the organization's objectives and adheres to professional standards, thereby maintaining and enhancing the value provided by the audit function. Reference: IIA standards related to the quality assurance and improvement program, which advocate for ongoing monitoring to ensure the effectiveness of the internal audit activity.
According to IIA guidance, which of the following actions by a new chief audit executive would be most appropriate to gain an understanding of the current level of knowledge, skills, and competencies required by an internal audit activity to fulfill its responsibilities?
According to IIA guidance, the most appropriate action for a new chief audit executive to gain an understanding of the current level of knowledge, skills, and competencies required by an internal audit activity is to identify gaps in the activity's proficiency based on criteria defined by a widely accepted competency framework. This method directly addresses the proficiency needs and aligns the internal audit team's capabilities with professional standards and the demands of their specific roles within the organization. Reference: The IIA's guidance on internal audit competency frameworks, which suggests using established standards to assess and align internal audit capabilities.
In which of the following situations would the organizational independence of an internal audit activity be impaired?
The organizational independence of an internal audit activity is considered impaired if there are scope limitations imposed on internal audits. Such limitations prevent the internal audit activity from fully evaluating and reporting on risk management, control, or governance processes within the organization, thus hindering the ability to perform work freely and objectively. Administrative reporting lines (such as to the CEO), the process of compensation approval, or assurance services provided for previous responsibilities do not inherently impair independence unless they lead to restrictions on audit scope or influence over audit findings. Reference: IIA Standards and guidance on independence and objectivity.
Which of the following is a strategic risk that internal auditors should consider when performing a third-party risk management engagement?
Loss of intellectual property is a significant strategic risk that internal auditors should consider when performing a third-party risk management engagement. This risk can have substantial implications for the organization's competitive advantage, reputation, and financial performance. Ensuring that third parties have adequate controls to protect intellectual property is essential for mitigating this risk. Internal auditors should evaluate the effectiveness of these controls and the potential impact of intellectual property loss on the organization's strategic objectives.
The IIA Standards: Standard 2120 -- Risk Management: 'The internal audit activity must evaluate the effectiveness and contribute to the improvement of risk management processes.'
IIA Practice Guide: 'Auditing Third-party Risk Management': Highlights the importance of assessing strategic risks, including intellectual property protection, in third-party relationships.
An engagement supervisor notes that an internal auditor usually documents and submits draft audit reports for review without giving the process owners the opportunity to state their position on the issues raised. How should the engagement supervisor respond?
The engagement supervisor should encourage the auditor to improve communication skills. Effective communication is essential for internal auditors, especially in ensuring that process owners have the opportunity to respond to and clarify any issues raised in the draft audit report. This collaboration helps ensure that the audit findings are accurate and that any misunderstandings or errors are resolved before the report is finalized. Encouraging better communication also helps build a positive relationship between the audit function and the audit clients.
The IIA Standards: Standard 2420 -- Quality of Communications: 'Communications must be accurate, objective, clear, concise, constructive, complete, and timely.'
IIA Practice Guide: 'Effective Communication for Internal Auditors': Emphasizes the importance of clear and effective communication in the audit process, including involving audit clients in the review of draft reports.
