QUESTION: 25

According to IIA guidance, which of the following statements is true regarding engagement planning?

For both assurance and consulting engagements, planning typically occurs after the engagement objectives and scope have already been determined.
The expectations and objectives of an assurance engagement are usually determined by. or in conjunction with, the engagement client
Internal auditors may not need to complete a preliminary risk assessment for a consulting engagement as they would when planning an assurance engagement.
For both consulting and assurance engagements, internal auditors usually form the engagement objectives prior to completing the preliminary risk assessment

Answer(s): B

Explanation:

The expectations and objectives of an assurance engagement are often determined in conjunction with the engagement client, aligning with the client's needs and the scope of the engagement. In consulting engagements, internal auditors provide advice and services tailored to the client's requests, which may not always follow a preliminary risk assessment process like in assurance engagements.

Reference:

The IIA's International Standards for the Professional Practice of Internal Auditing (Standards) provide detailed guidance on this aspect of engagement planning, particularly in Standards 2200 and 2201.

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QUESTION: 26

An internal audit activity maintains a quality assurance and improvement program that includes annual self-assessments The internal audit activity includes in each engagement report a clause that the engagement is conducted in conformance with the International Standards for the Professional Practice of Internal Auditing (Standards).
Which of the following justifies inclusion of this clause in the reports?

Internal audit activity policies and engagement records provide relevant, sufficient, and competent evidence that the statement is correct.
The audit committee has reviewed the annual self-assessment results and approved the use of the clause.
The self-assessment results were validated by a qualified external review team three years prior.
The internal audit charter, approved by the audit committee, requires conformance with the Standards

Answer(s): C

Explanation:

According to the IIA Standards, an internal audit activity must have an external assessment conducted at least once every five years by a qualified, independent reviewer or review team from outside the organization. The validation by an external team ensures that the internal audit activity's self-assessments and quality assurance practices meet the required standards.

Reference:

IIA Standard 1312 (External Assessments) and IIA Standard 1320 (Reporting on the Quality Assurance and Improvement Program) provide detailed guidelines for this process.

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QUESTION: 27

According to IIA guidance, which of the following is true regarding typical fraud schemes?
1. A diversion occurs when an employee has an undisclosed personal economic interest in a transaction that adversely affects the organization
2. Tax evasion is intentional reporting of false or misleading information on a tax return by an organization to reduce taxes owed.
3. Skimming involves stealing cash or assets from the organization and is normally concealed by adjusting the organization's records
4 Disbursement fraud occurs when a person causes the organization to issue a payment for fictitious goods or services

1 and 3.
1 and 4
2 and 3.
2 and 4

Answer(s): D

Explanation:

Diversion typically involves redirecting resources or assets for personal use, not just having an undisclosed interest.
Tax evasion involves deliberate falsification of financial information to avoid tax liabilities. Skimming is taking cash before it is recorded in the accounting system, usually difficult to detect. Disbursement fraud involves creating fictitious invoices or vendors to divert funds.

Reference:

These definitions are aligned with common fraud schemes outlined in the ACFE (Association of Certified Fraud Examiners) Fraud Tree and various IIA practice guides.

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QUESTION: 28

Which of the following types of policies best helps promote objectivity in the internal audit activity's work?

Policies that are distributed to all members of the internal audit activity and require a signed acknowledgment.
Policies that match internal auditors' performance with feedback from management of the area under review
Policies that keep internal auditors in areas where they have vast audit expertise.
Policies that provide examples of Inappropriate business relationships

Answer(s): D

Explanation:

Promoting objectivity in internal auditing involves ensuring that auditors avoid conflicts of interest and maintain independence in both fact and appearance. Policies that clearly define and give examples of inappropriate business relationships help auditors understand and avoid situations that could impair their objectivity.

Reference:

IIA Standard 1120 (Individual Objectivity) emphasizes the importance of internal auditors maintaining an unbiased mindset and avoiding conflicts of interest.

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QUESTION: 25

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QUESTION: 26

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QUESTION: 28

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