BEC 2 - Risk Management, IPPF, Attribute and Performance Standards

Question 1

The IIA’s Code of Ethics identifies four “Principles” around which the 12 Rules of Conduct are organized. What are the key words associated with the 4 Principles?

Answer 1

(1) Integrity; (2) Objectivity; (3) Confidentiality; and (4) Competency.

Question 2

What is the IIA (Institute of Internal Auditors’)?

Answer 2

It is a global professional organization that sets standards with respect to internal auditing. (has more than 170k members.

Question 3

The International Professional Practices Framework (IPPF) is the IIA’s authoritative guidance. What 3 elements makes up the mandatory guidance?

Answer 3

1) Definition of internal auditing.
2) Code of ethics.
3) International standards.

Question 4

The International Professional Practices Framework (IPPF) is the IIA’s authoritative guidance. What 3 elements makes up the strongly recommended guidance?

Answer 4

a. Position papers – Provide guidance in understanding important governance, risk, or control issues relevant to internal auditing.
b. Practice advisories – Address internal auditing approaches, methodologies, and other considerations, but not detailed processes or procedures.
c. Practice guides – Provide detailed guidance for internal audit activities, including audit programs, and other tools and techniques.

Question 5

Define implementation standards.

Answer 5

These standards differentiate the requirements specifically applicable to “assurance” activities and “consulting” activities within the Attribute Standards and the Performance Standards.

Question 6

What is the purpose of “Interpretations” of the International Standards?

Answer 6

Interpretations clarify the terms/concepts within the Attribute and Performance Standards (Interpretations are an integral part of the International Standards).

Question 7

List the two basic categories of standards that comprise the International Standards for the Professional Practice of Internal Auditing.

Answer 7

1. Attribute Standards;

2. Performance Standards.

Question 8

The Attribute Standards related to an internal audit activity’s Quality Assurance and Improvement Program must include periodic external assessments. How often is an external assessment required?

Answer 8

Standard 1312 states, “External assessments must be conducted at least once every five years…”

Question 9

The Attribute Standards focus on four primary themes around which the remaining Attribute Standards are organized. What are the four primary themes associated with the Attribut Standards?

Answer 9

(1) Purpose, Authority, and Responsibility; (2) Independence and Objectivity; (3) Proficiency and Due Professional Care; and (4) Quality Assurance and Improvement Program.

Question 10

The IIA’s Attribute Standards focus on key characteristics (“attributes”) of organizations and individuals performing internal audit activities. What are the four primary themes?

Answer 10

(1) Purpose, Authority, and Responsibility; (2) Independence and Objectivity; (3) Proficiency and Due Professional Care; and (4) Quality Assurance and Improvement Program

Question 11

Define “Purpose, Authority, and Responsibility (Standard 1000)”.

Answer 11

“The purpose, authority, and responsibility of the internal audit activity must be formally defined in an internal audit charter, consistent with the Definition of Internal Auditing, the Code of Ethics and the Standards. The chief audit executive must periodically review the internal audit charter and present it to senior management and the board for approval.”

Question 12

Define “Quality Assurance and Improvement Program (Standard 1300)”.

Answer 12

“The chief audit executive must develop and maintain a quality assurance and improvement program that covers all aspects of the internal audit activity.”

Question 13

Define “Independence and Objectivity (Standard 1100)”.

Answer 13

“The internal audit activity must be independent, and internal auditors must be objective in performing their work.”

Question 14

Define “Proficiency and Due Professional Care (Standard 1200)”.

Answer 14

“Engagements must be performed with proficiency and due professional care.”

Question 15

The Performance Standards are organized around seven primary themes:

Answer 15

(1) Managing the Internal Audit Activity; (2) Nature of Work; (3) Engagement Planning; (4) Performing the Engagement; (5) Communicating Results; (6) Monitoring Progress; and (7) Resolution of Senior Management’s Acceptance of Risks

Question 16

“Internal auditors must develop and document a plan for each engagement, including the engagement’s objectives, scope, timing, and resource allocations.” is the definition for:

Answer 16

Engagement planning (standard 2200)

Question 17

List the seven primary themes of Performance Standards.

Answer 17

(1) Managing the Internal Audit Activity; (2) Nature of Work; (3) Engagement Planning; (4) Performing the Engagement; (5) Communicating Results; (6) Monitoring Progress; and (7) Resolution of Senior Management’s Acceptance of Risks.

Question 18

“The chief audit executive must establish and maintain a system to monitor the disposition of results communicated to management.” is the definition for:

Answer 18

“Monitoring Progress (Standard 2500)”

Question 19

“The internal audit activity must evaluate and contribute to the improvement of governance, risk management, and control processes, using a systematic and disciplined approach.” is the definition for:

Answer 19

“Nature of Work (Standard 2100)”.

Question 20

“Internal auditors must identify, analyze, evaluate, and document sufficient information to achieve the engagement’s objectives.” is the definition for:

Answer 20

“Performing the Engagement (Standard 2300)”

Question 21

Define “Communicating Results (Standard 2400)”.

Answer 21

“Internal auditors must communicate the results of engagements.”

Question 22

Define the “Resolution of Senior Management’s Acceptance of Risks (Standard 2600)”.

Answer 22

“When the chief audit executive believes that senior management has accepted a level of residual risk that may be unacceptable to the organization, the chief audit executive must discuss the matter with senior management. If the decision regarding residual risk is not resolved, the chief audit executive must report the matter to the board for resolution.”

Question 23

Define “Managing the Internal Audit Activity (Standard 2000)”.

Answer 23

“The chief audit executive must effectively manage the internal audit activity to ensure that it adds value to the organization.”