Which of the following activities would an internal auditor perform as a consulting engagement for an organization?

1. A. Advising new internal auditors working for the organization on how to develop strategies on planning audits for the upcoming fiscal year
2. B. Assessing whether the organization's corporate social responsibility program is meeting its yearly goals to reduce carbon emissions.
3. C. Briefing the organization's department managers on how to implement risk management processes into their daily operations.
4. D. Communicating with senior management to better understand how new purchasing controls will minimize payment processing time

Correct Answer: C
✑ Consulting Engagements:Consulting engagements are advisory in nature and are intended to add value and improve an organization??s governance, risk management, and control processes.
✑ Role of Internal Auditor:In a consulting role, an internal auditor provides advice,
facilitates risk management, and helps enhance the efficiency and effectiveness of operations.
✑ Briefing Managers:By briefing department managers on how to implement risk
management processes into their daily operations, the internal auditor is providing valuable advice that can help improve the organization's risk management framework.
✑ IIA Standards:The IIA??s standards emphasize that consulting activities should aim
at improving governance, risk management, and control processes without taking on management responsibilities.
References:
✑ IIA Standard 2010 – Planning .

A corporate merger decision prompts the chief audit executive (CAE) to propose interm
changes to the existing annual audit plan to account for emerging risks Which of the following Is the most appropriate action for the CAE to take regarding the changes made to the audit plan?

1. A. Present the revised audit plan directly to the board for approval
2. B. Communicate with the chief financial officer and present the revised audit plan to the CEO for approval.
3. C. Present the revised audit plan directly to the CEO for approval.
4. D. Communicate with the CEO and present the revised audit plan to the board for approval

Correct Answer: D
Role of the CAE: The Chief Audit Executive (CAE) is responsible for developing a risk- based audit plan and ensuring it is aligned with the organization??s goals and emerging risks. Significant changes to the audit plan must be communicated appropriately within the organization.
IIA Standards:
✑ Standard 2020 – Communication and Approval: The CAE must communicate the internal audit plan and resource requirements, including significant interim changes, to senior management and the board for review and approval.
✑ Risk Assessment: Any changes to the audit plan due to emerging risks, such as a corporate merger, must be documented and approved at the highest levels to ensure comprehensive risk coverage.
Most Appropriate Action:
✑ Communication with the CEO: The CAE should first discuss the revised audit plan with the CEO to ensure alignment with executive management??s perspective on emerging risks.
✑ Board Approval: After discussing with the CEO, the CAE should present the revised audit plan to the board for formal approval, ensuring transparency and governance.
References:
✑ Presenting the revised audit plan to the board after discussing with the CEO ensures that all relevant stakeholders are informed and that the revised plan is formally approved, maintaining alignment with IIA standards.

Which of the following would most likely form part of the engagement scope?

1. A. Potential legislation on privacy topics will be employed as a compliance target O Wire transfers that exceeded $10,000 in the last 12 months will be analyzed.
2. B. Both random and judgmental samplings will be used during the engagement
3. C. The probability of significant errors will be considered via risk assessment.

Correct Answer: B
✑ Introduction:
✑ Scope Definition:
✑ Options Analysis:
✑ Conclusion:
:
Internal Audit Standards and Practice Guides

A regional entertainment organization is in the process of developing a corporate social responsibility (CSR) policy. Management invites ideas from employees when developing the CSR policy Which of the following is the most appropriate idea to include?

1. A. Management has overall responsibility for the effectiveness of governance, risk management, and internal control processes associated with CSR.
2. B. The board Is responsible for ensuring that CSR objectives are established, risks are managed, performance is measured, and activities are appropriately monitored and reported
3. C. Management is responsible for ensuring that the organization's CSR principles arecommunicated, understood, and integrated into decision-making processes.
4. D. Generally, CSR activities are limited to the management of the organization, thus, employees do not have a responsibility for ensuring the success of CSR objectives.

Correct Answer: C
CSR Policy Development: In developing a Corporate Social Responsibility (CSR) policy, it is important that the principles of CSR are communicated and understood throughout the organization.
Integration into Decision-Making: Management??s responsibility includes ensuring that CSR principles are not only communicated but also integrated into the organization's decision-making processes at all levels. This ensures that CSR is part of the organizational culture and operational strategies.
Board??s Role: While the board has a role in overseeing and ensuring that CSR objectives are established and risks are managed, the day-to-day responsibility for integrating CSR into business operations lies with management.
IIA Guidance: According to IIA guidance, internal auditors should evaluate the design, implementation, and effectiveness of the organization??s ethics-related objectives, programs, and activities, which include CSR initiatives (Standard 2110 - Governance).
References:
✑ Effective communication and integration of CSR principles ensure that the organization operates in a socially responsible manner, aligning its business practices with societal expectations and contributing to sustainable development.

Which of the following should be included in a company's year-end inventory valuation?

1. A. Company goods that were sold during the year, free on board shipping point, that have been shipped but not yet received by the customer
2. B. Goods purchased by the company, free on board destination, that have not yet been received.
3. C. Goods on consignment, which the company is trying to sell for its customers.
4. D. Company goods for sale on consignment at a consignment shop

Correct Answer: D
Year-end inventory valuation should include all goods owned by the company, regardless of their location. This includes goods for sale on consignment at a consignment shop, as these items remain the property of the company until sold. Goods sold FOB shipping point and goods purchased FOB destination that have not yet been received are not included, as ownership has transferred or not yet been acquired respectively. Goods on consignment that the company is trying to sell for others are also excluded because the company does not own them