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The head of customer service asked the chief audit executive (CAE) whether internal auditors could assist her staff with conducting a risk self-assessment in the customer service department The CAE promised to meet with customer service managers analyze relevant business processes and come up with a proposal Who is most likely to be the final approver of the engagement objectives and scope?
The chief audit executive (CAE) is responsible for the approval of the engagement objectives and scope. While the head of customer service and other stakeholders may provide input, it is ultimately the CAE's responsibility to ensure that the engagement aligns with the internal audit plan and meets the organization's overall objectives. The CAE's approval ensures the independence and objectivity of the internal audit function.
The Institute of Internal Auditors (IIA) Standard 2010 - Planning
IIA Standard 2200 - Engagement Planning
Which of the following should the chief audit executive do when evaluating the possibility of relying on external auditors' work?
When the chief audit executive (CAE) evaluates the possibility of relying on external auditors' work, the primary focus should be on examining the objectivity and any perceived or actual conflicts of interest that might affect the external auditors' work. Ensuring that the external auditors are objective and free from conflicts is crucial for determining whether their work can be relied upon by the internal audit activity.
Detailed Explanation:
IIA Standard 2050 -- Coordination and Reliance:
This standard requires that the internal audit activity coordinates its efforts with external auditors to ensure proper coverage and minimize duplication of efforts. When relying on external auditors, the CAE must assess the external auditors' objectivity and independence.
Objectivity and Conflicts of Interest:
Objectivity refers to the unbiased mental attitude that allows external auditors to perform their work with integrity and impartiality. Conflicts of interest, whether perceived or actual, can compromise this objectivity. The CAE needs to ensure that external auditors are free from any relationships or interests that could affect their judgment.
IIA Practice Advisory 2050-2:
The advisory suggests that the internal audit activity should evaluate the competence, objectivity, and independence of external auditors before relying on their work. A thorough examination of potential conflicts of interest is essential to ensure that the reliance on their work is justified.
Why Not Other Options?
Option A (Perform comprehensive background checks): While background checks may be useful, the primary focus should be on objectivity and conflicts of interest.
Option B (Recalculate all financial calculations): This approach is excessive and unnecessary if the external auditors' work can be relied upon.
Option D (Review audit tests in previous audits): While reviewing previous work is important, it does not address the key issue of objectivity and independence.
Conclusion: Option C is correct because the CAE must focus on ensuring that external auditors are objective and free from conflicts of interest, which is essential for relying on their work, in accordance with IIA standards.
When setting the scope for the identification and assessment of key risks and controls in a process, which of the following would be the least appropriate approach?
When setting the scope for identifying and assessing key risks and controls in a process, developing the scope of the audit based on a bottom-up perspective is the least appropriate approach. A bottom-up perspective typically focuses on individual controls and processes without necessarily aligning with the organization's critical business objectives and risk appetite. Effective risk assessment should begin with a top-down approach, identifying key business objectives and the associated risks, and then determining the necessary controls to manage these risks. Reference: IIA Practice Guide -- Auditing Key Risk Management, IIA Standard 2200 -- Engagement Planning
An internal auditor is preparing an internal control questionnaire for the procurement department as part of a preliminary survey. Which of the following would provide the best source of information for questions?
When preparing an internal control questionnaire for the procurement department, referencing relevant procurement laws or regulations ensures that the questions are aligned with the legal and regulatory requirements governing procurement activities. This approach helps to ensure that the questionnaire addresses all necessary compliance issues and identifies potential gaps in the organization's procurement processes that could lead to non-compliance. Reference:
The Institute of Internal Auditors (IIA) - Standards for the Professional Practice of Internal Auditing, Standard 2201 - Planning Considerations
Which of the following is one of the five attributes that internal auditors include when documenting a deficiency?
One of the five attributes that internal auditors include when documenting a deficiency is the criteria used to make the evaluation. The criteria represent the standards, measures, or expectations used in the evaluation process. Documenting the criteria is essential as it provides a benchmark against which the actual conditions can be compared, thereby helping to identify and explain deficiencies in controls or processes.
The Institute of Internal Auditors (IIA) Standard 2410 -- Criteria for Communicating: 'Final communication of engagement results must, where appropriate, contain the internal auditors' overall opinion and/or conclusions, as well as the criteria used for evaluation.'
IIA Practice Guide on 'Documenting Internal Audit Observations'
