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Free IIA-IAP Exam Braindumps (page: 4)

Page 3 of 26
PDF with 100 Questions

Which of the following best ensures that the internal audit activity is free from undue interference from management?

  1. Audit policies and procedures that are comprehensive and well-documented, in accordance with the Standards.
  2. A board audit committee that is composed of competent, independent members.
  3. An audit charter that defines the chief audit executive's functional reporting relationship with the board.

Answer(s): C

Explanation:

Comprehensive and Detailed Step-by-Step Reference to IIA Standards:

Standard 1110 - Organizational Independence: The chief audit executive (CAE) must report functionally to the board to ensure independence.

The audit charter must define the CAE's functional reporting line to the board, securing protection from undue management influence.

Reasoning:

Option C addresses the foundational document--the audit charter--that establishes the CAE's authority and independence.

Option A refers to operational standards, but they do not directly safeguard against interference.

Option B strengthens governance but is secondary to the audit charter in securing independence.

Impact:

A robust audit charter formalizes the CAE's reporting relationship and ensures organizational independence, empowering internal audit.



Which of the following describes how the internal audit activity can add the greatest value by assisting management with internal controls?

  1. Internal auditors should assist in designing strong controls.
  2. Internal auditors should monitor how internal controls are functioning.
  3. Internal auditors should evaluate the effectiveness and efficiency of internal controls.

Answer(s): C

Explanation:

Comprehensive and Detailed Step-by-Step Reference to IIA Standards:

Standard 2130 - Control: Internal audit must evaluate and contribute to the improvement of governance, risk management, and control processes.

Designing or operating controls (Options A and B) risks impairing internal audit independence (Standard 1100).

Reasoning:

Option C aligns with internal audit's role of evaluating internal controls objectively.

Option A could involve a management function, which compromises independence.

Option B focuses on monitoring, a management responsibility, and does not leverage internal audit's evaluative expertise.

Best Practice:

By evaluating controls, internal auditors provide actionable insights that help improve control effectiveness and efficiency without compromising independence.



Which of the following is most likely to be considered an internal audit assurance service?

  1. Process design engagement.
  2. Facilitation engagement.
  3. Compliance engagement.

Answer(s): C

Explanation:

Comprehensive and Detailed Step-by-Step Reference to IIA Standards:

Definition of Assurance Services: Assurance services involve the objective examination of evidence to provide an independent assessment of governance, risk management, and control processes.

Compliance engagements align with assurance services by verifying adherence to laws, regulations, or internal policies.

Reasoning:

Option C qualifies as assurance because it involves assessing whether compliance requirements are met.

Option A (process design) and Option B (facilitation) are advisory in nature and fall under consulting services, not assurance.

Impact on the Organization:

Compliance assurance engagements provide critical oversight, helping organizations maintain accountability and avoid regulatory penalties.



What is the purpose of establishing engagement objectives during the planning phase of an internal audit?

  1. To ensure that audit procedures are designed to address the risks relevant to the area being audited.
  2. To ensure that all auditors have a common understanding of the area being audited.
  3. To ensure that the work performed by other internal or external assurance providers is considered during audit planning.

Answer(s): A

Explanation:

Comprehensive and Detailed Step-by-Step Reference to IIA Standards:

Standard 2210 - Engagement Objectives: Internal auditors must establish objectives for each engagement to align with the organization's goals and address identified risks.

Reasoning:

Option A is correct because engagement objectives focus on ensuring audit procedures target and mitigate identified risks effectively.

Option B (common understanding) is important for team alignment but is secondary to risk-focused objectives.

Option C (considering work of other assurance providers) is part of planning but not the primary purpose of setting objectives.

Importance of Objectives:

Engagement objectives drive the audit's focus, ensuring that procedures are purposeful and tailored to mitigate relevant risks.






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