QUESTION: 65

Which of the following statements best demonstrates application of due professional care during an assurance engagement?

The engagement detected irregularities and noncompliance instances.
The engagement supervisor had no significant comments in the supervisory review.
The audit procedures were systematically planned: executed, and documented.
The engagement objectives were designed to assist the engagement client

Answer(s): C

Explanation:

Introduction:
Due professional care requires auditors to plan, execute, and document their work meticulously, ensuring that their findings and conclusions are based on a thorough and objective assessment.
Application of Due Professional Care:
It involves following a structured approach to audit engagements to ensure that all necessary steps are taken to gather sufficient and appropriate evidence.
Options Analysis:
Option A: Detecting irregularities and noncompliance instances are outcomes of the engagement but do not inherently demonstrate due professional care.
Option B: Lack of significant comments from the supervisor suggests quality but does not demonstrate the systematic approach needed for due professional care. Option C: Systematically planning, executing, and documenting audit procedures directly reflects the auditor's adherence to due professional care principles. Option D: While important, designing engagement objectives to assist the client does not cover the comprehensive nature of due professional care.
Conclusion:
The best demonstration of due professional care during an assurance engagement is the systematic planning, execution, and documentation of audit procedures.

Reference:

Internal Audit Standards and Practice Guides

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QUESTION: 66

Which of the following statements is true regarding corporate social responsibility (CSR)?

Many of the areas explored by CSR are normally included in an audit universe or annual audit plan
Despite significant corporate resources spent on CSR reporting, investors generally do not rely on CSR information.
Unlike many other areas of reporting responsibilities impacting stakeholders, CSR is largely voluntary.
Typically, operating management does not have a major role to play based on the public nature of reporting

Answer(s): C

Explanation:

Introduction:

Corporate Social Responsibility (CSR) involves companies taking responsibility for their impact on society and the environment beyond statutory obligations.
Nature of CSR Reporting:
CSR reporting is generally voluntary, although some regions and industries may have mandatory requirements.
Options Analysis:
Option A: Many CSR areas may overlap with the audit universe or annual audit plan, but not all. Option B: Investors may increasingly rely on CSR information, particularly in ESG (Environmental, Social, Governance) investing.
Option C: CSR reporting is largely voluntary, unlike financial or regulatory reporting which is often mandatory.
Option D: Operating management typically plays a significant role in CSR efforts and reporting.
Conclusion:
The correct statement regarding CSR is that it is largely voluntary, unlike many other areas of reporting responsibilities that impact stakeholders.

Reference:

Internal Audit Standards and Practice Guides

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QUESTION: 67

The chief audit executive (CAE) has assigned an internal auditor to an upcoming engagement.
Which of the following requirements would most likely indicate that the Internal auditor was assigned to an assurance engagement?

The assigned internal auditor must determine the objectives, scope, and techniques of the engagement.
The CAE must personally obtain the needed skills, knowledge, or other competencies if the internal auditor does not have them.
The assigned internal auditor must not assume management responsibilities while performing the engagement.
The assigned internal auditor must maintain objectivity while performing the engagement

Answer(s): C

Explanation:

Introduction:

Assurance engagements require internal auditors to maintain objectivity and avoid conflicts of interest.
Role of Internal Auditors in Assurance Engagements:
They must remain independent and not take on roles that could compromise their impartiality.
Options Analysis:
Option A: Determining the objectives, scope, and techniques can be part of their role but does not define an assurance engagement specifically.
Option B: The CAE obtaining skills or competencies personally is not a standard requirement for assurance engagements.
Option C: Not assuming management responsibilities is crucial to maintain independence and objectivity during assurance engagements.
Option D: While maintaining objectivity is important, it is not the distinguishing feature of being assigned to an assurance engagement.
Conclusion:
The key requirement indicating an internal auditor was assigned to an assurance engagement is that they must not assume management responsibilities during the engagement.

Reference:

Internal Audit Standards and Practice Guides

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QUESTION: 68

If the skills and competencies are not present within the internal audit activity to complete an ad-hoc assurance engagement, which of the following is an acceptable resolution?

Politely decline the engagement due to a lack of qualified staff available at the time.
Complete the engagement as requested, with the best of the current staff's abilities.
Consider using employees from other departments in the organization on the audit team.
Change the scope of the testing to ensure that only available staff proficiencies are used

Answer(s): C

Explanation:

Introduction:
When the internal audit team lacks necessary skills for an ad-hoc assurance engagement, leveraging internal resources can be a practical solution.
Resolving Skill Gaps:
Using employees from other departments can provide the needed expertise while maintaining the engagement's integrity.
Options Analysis:
Option A: Declining the engagement may not be feasible and does not address the need. Option B: Completing the engagement without the required skills can compromise quality. Option C: Using employees from other departments brings in the necessary competencies and supports cross-functional collaboration.
Option D: Changing the scope may limit the effectiveness of the engagement.
Conclusion:
The acceptable resolution is to consider using employees from other departments in the organization to bring in the required skills for the engagement.

Reference:

Internal Audit Standards and Practice Guides

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