Ch.A, Topic 2: Define Purpose, Authority, and Responsibility of the Internal Audit Activity

Question 1

What can add significant value to an organization’s internal control, risk management, and governance process?

Answer 1

The objectivity, skills, and knowledge of competent internal auditors.

Question 2

An effective internal audit activity can provide…

Answer 2

Assurance to other stakeholders such as regulators, employees, providers of finance, and shareholders.

Question 3

The purpose, authority and responsibility of the internal audit activity MUST be understood for the internal audit activity:

Answer 3

to best support management and board of directors in accomplishing overall organizational goals and objectives and strengthen internal controls and corporate governance.

Question 4

Purpose of Internal Audit Activity (5)

Answer 4

1. Provide an independent, objective assurance and consulting activity.
2. Add value and improve an organization’s operations.
3. Support organizational objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance process.
4. Determine if organizational risk management, control, and governance processes are in place and functioning properly.
5. communicate any opportunities for improvement or risk exposures to the appropriate management level.

Question 5

Authority of the Internal Audit Activity (3)

Answer 5

1. Provide appropriate UNFETTERED ACCESS to records, personnel, and physical properties.
2. Maintain FULL AND OPEN ACCESS with the audit committee, board of directors, or other appropriate governing authority.
3. Secure necessary internal and external RESOURCES to accomplish audit activity objectives as planned.

Question 6

Responsibility of the Internal Audit Activity (1-2 of 5)

Answer 6

1. Document the objectives & scope of engagement + the methodology to be used.
2. Ensure that audit activity STAFF HAVE SUFFICIENT KNOWLEDGE, skills, experience and/or professional certifications to fulfill ENGAGEMENT CHARTER.

Question 7

Responsibility of the Internal Audit Activity (3 - 5 of 5)

Answer 7

3. COMMUNICATE results of the IA Activity or other matters that the CAE determines necessary to management, audit committee, the board, or other governing body.
4. Consider coordination of external/internal audit work to increase economy, efficiency, and effectiveness of the overall audit process.
5. Do NOT perform management activities!!!!