An internal audit activity includes in its audit reports the assertion that its work is performed in conformance with the International Standards for the Professional Practice of Internal Auditing {Standards). A recent external quality assessment concluded that the internal audit activity had substantial deficiencies that impact its overall operations. According to IIA guidance, which of the following is the most appropriate action for issuing future audit reports?

1. A. Refrain from indicating that the internal audit activity operates in conformance with the Standards until the chief audit executive confirms that the internal audit activity has addressed all areas of nonconformance and the audit committee has been notified.
2. B. Refrain from indicating that the internal audit activity operates in conformance with the Standards until another external assessment confirms that the significant areas of nonconformance have been addressed.
3. C. Indicate that the internal audit activity operates in partial conformance with the Standards, as the internal audit activity has a quality assurance and improvement program in place to address deficiencies and has met the requirement for conducting an external assessment.
4. D. Update and reissue previous audit reports, removing the assertion that the internal audit activity operates in conformance with the Standards, and distribute them to all parties who received the original reports.

Correct Answer: B

A new internal audit activity is creating its first charter. According to IIA guidance, which of the following objectives would be appropriate for inclusion in the charter?

1. A. Continuously monitor the organization's overall risk activities in relation to its risk appetite.
2. B. Evaluate the adequacy and effectiveness of the organization's governance activities.
3. C. Oversee the establishment and administration of an effective risk management program.
4. D. Assist management in implementing recommended control improvements.

Correct Answer: C

Which of the following responsibilities would fall under the role of the chief audit executive, rather than internal audit staff or the audit manager?

1. A. Manage and support a quality assurance and improvement program.
2. B. Maintain industry-specific knowledge appropriate to the audit engagements
3. C. Set clear performance standards for internal auditors and the internal audit activity.
4. D. Apply problem-solving techniques for routine situations.

Correct Answer: C

Which of the following types of social responsibilities is voluntary and guided purely by the organization's desire to make social contributions?

1. A. The bottom of the pyramid responsibility.
2. B. Innovative responsibility.
3. C. Ethical responsibility.
4. D. Discretionary responsibility.

Correct Answer: C

An internal auditor completed an audit of a bank's loan department and found all significant risks to be managed adequately through effective internal controls. Which of the following would be an appropriate conclusion to report to management?

1. A. The residual risk is lower than or equal to the risk appetite.
2. B. The residual risk is higher than or equal to the risk appetite.
3. C. The inherent risk is lower than or equal to the risk tolerance.
4. D. The inherent risk is higher than or equal to the risk tolerance.

Correct Answer: A