Domain I - Internal Audit Attributes

Question 1

Define Assurance (as per IIA)

Answer 1

An objective examination of evidence for the purpose of providing an independent assessment on governance, risk management and control processes for the organization.

Question 2

What is consulting activity?

Answer 2

Advisory and related client service activities, the nature and scope of which are agreed with client and which are intended to add value and improve an organisation’s governance, risk management, and control processes without the internal auditor assuming management responsibility.

Question 3

What is the difference between giving assurance and consulting activity?

Answer 3

Assurance - Independent, objective examination of evidence Consulting - Customer-input in scope of review

Question 4

Examples of Consulting

Answer 4

Counsel, advice Facilitations Training Coaching

Question 5

What is IPPF short for?

Answer 5

International Professional Practices Framework

Question 6

What is the purpose of the IPPF?

Answer 6

The Global Institute of Internal Auditors (IIA Global) has developed a comprehensive range of guidance to help internal auditors in their work. The IPPF organises this guidance in a logical structure. Taken together, the elements of the IPPF guide the practice of internal auditing, and encourage the consistent application of a high level of proficiency and professionalism around the world.

Question 7

Explain the main areas of IPPF as per the visual framework.

Answer 7

Question 8

In IPPF, what does the recommended guidance describe?

Answer 8

Recommended guidance describes practices for effectively implementing the mandatory elements.

Question 9

What is the Mission of IA in IPPF?

Answer 9

The mission of Internal Audit is to enhance and protect organisational value by providing risk-based and objective assurance, advice and insight.

Question 10

What is the overarching aspect of IPPF that is separate from the mandatory and recommended categories of guidance?

Answer 10

The mission

Question 11

What are the core principles there for?

Answer 11

To articulate internal audit effectiveness. They should all be present and operating effectively.

Question 12

How many core principles are there? Name them.

Answer 12

1. Demonstrates integrity
2. Demonstrates competence and due professional care
3. Is objective and free from undue influence (independent)
4. Aligns with the strategies, objectives, and risks of the organisation
5. Is appropriately positioned and adequately resourced
6. Demonstrates quality and continuous improvement
7. Communicates effectively
8. Provides risk-based assurance
9. Is insightful, proactive and future-focused
10. Promotes organisational improvement

Question 13

Which part of IPPF are core principles in?

Answer 13

Mandatory guidance

Question 14

What is the definition of Internal Auditing?

Answer 14

Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organisation’s operations. It helps an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes.

Question 15

Where in the IPPF does the definition of Internal Auditing lie?

Answer 15

Mandatory Guidance

Question 16

Where in IPPF do the International Standards for Professional Practice of Internal Auditing lie?

Answer 16

Mandatory guidance

Question 17

What are divided into attributes and performances?

Answer 17

Standards

Question 18

What are standards divided into?

Answer 18

Attribute and performance standards

Question 19

What does an attribute standard mean?

Answer 19

Attribute standards address the attributes of parties performing internal auditing.

Question 20

What does performance standard mean?

Answer 20

Performance standards address the manner in which internal auditing is performed.

Question 21

What is the heading of standard 1000? Is it an attribute or performance standard?

Answer 21

Purpose, authority and responsibility
Attribute

Question 22

What is the heading of standard 1100? Is it an attribute or performance standard?

Answer 22

Independence and objectivity
Attribute

Question 23

What is the heading of standard 1200? Is it an attribute or performance standard?

Answer 23

Proficiency and due professional care
Attribute

Question 24

What is the heading of standard 1300? Is it an attribute or performance standard?

Answer 24

Quality assurance and improvement programme
Attribute

Question 25

How many attribute standards are there?

Answer 25

Four attribute standards are 1000, 1100, 1200 and 1300

Question 26

What is the heading of standard 2000? Is it an attribute or performance standard?

Answer 26

Managing the internal audit activity
Performance

Question 27

What is the heading of standard 2100? Is it an attribute or performance standard?

Answer 27

Nature of work
Performance

Question 28

What is the heading of standard 2200? Is it an attribute or performance standard?

Answer 28

Engagement Planning

Performance

Question 29

What is the heading of standard 2300? Is it an attribute or performance standard?

Answer 29

Performing the engagement

Performance

Question 30

What is the heading of standard 2400? Is it an attribute or performance standard?

Answer 30

Communicating results
Performance

Question 31

What is the heading of standard 2500? Is it an attribute or performance standard?

Answer 31

Monitoring progress
Performance

Question 32

What is the heading of standard 2600? Is it an attribute or performance standard?

Answer 32

Communicating the acceptance of risks
Performance

Question 33

How many performance standards are there?

Answer 33

The seven performance standards are 2000, 2100, 2200, 2300, 2400, 2500 and 2600.

Question 34

Where in IPPF does code of ethics lie?

Answer 34

Mandatory guidance

Question 35

What are the four headings of Code of Ethics?

Answer 35

Integrity, objectivity, confidentiality and competency.

Question 36

Where in the IPPF does the principle of Integrity lie and what does it entail?

Answer 36

Code of Ethics
The integrity of internal auditors establishes trust and thus provides the basis for reliance on their judgement.

Question 37

Where in the IPPF does the principle of Objectivity lie and what does it entail?

Answer 37

Code of Ethics
Internal auditors exhibit the highest level of professional objectivity in gathering, evaluating and communicating information about the activity or process being examined. Internal auditors make a balanced assessment of all the relevant circumstances and are not unduly influenced by their own interests or by others in forming.

Question 38

Where in the IPPF does the principle of Confidentiality lie and what does it entail?

Answer 38

Code of Ethics

Internal auditors respect the value and ownership of information they receive and do not disclose information without appropriate authority unless there is a legal and professional obligation to do so.

Question 39

Where in the IPPF does the principle of Competency lie and what does it entail?

Answer 39

Code of Ethics

Internal auditors apply the knowledge, skills and experience needed in the performance of internal auditing services.

Question 40

Where in IPPF does implementation guidance lie?

Answer 40

Recommended guidance

Question 41

What is implementation guidance for?

Answer 41

Implementation guides assist internal auditors in applying the Standards.

Question 42

Where in IPPF does supplemental guidance lie?

Answer 42

Recommended guidance

Question 43

What does supplemental guidance cover?

Question 44

Why is IPPF important?

Answer 44

internal audit is conducted in a diverse legal cultural environment for organisations that vary in size, purpose, complexity, and structure. And it can be conducted by people either in-house or external providers of internal audit services. So, the IPPF is a conceptual framework that organises authoritative guidance promulgated by the Global Institute of Internal Auditors who is considered to be a trustworthy, global guidance setting body.

The IIA provides internal audit professionals worldwide with guidance that’s organised in the IPPF as mandatory guidance, and then there is some recommended practice that sits alongside it. Conformance with the principles set in the mandatory guidance is required and essential for the professional practice of internal auditing.

Question 45

In terms of the IPPF, we talk about conforming versus complying. Can you explain the distinction between the two?

Answer 45

Complying, abiding by, or obeying rules and regulations. (IPPF Standards)

Conformance from the IPPF perspective, what the intention is, is that people will strive to make sure that they utilize the elements, the definition, the code of ethics, and the core principles as part of driving excellence in the internal audit profession and as individual internal auditors. It’s about respecting what the IPPF is trying to say and trying to make sure that we deliver the best we can as internal auditors for our organisation with the mission statement being the overarching message.

Question 46

Who is responsible for ensuring conformance with the IPPF?

Answer 46

Ultimately, the chief audit executive (US), the head of audit (UK), has a responsibility in accordance with the Standards to make sure that his or her function is conforming to the Standards, adapting best practice, delivering against those elements of the Standards where it’s a must rather than there’s an optional choice there.

Internal auditors have also an obligation to do the very best we can for our customers, our clients when we undertake audits and having a framework within which we can operate provides assurance to our customers that we’re doing the very best we can for them.

Question 47

True or false? The Mission is part of the mandatory guidance.

Answer 47

False.

Whilst the Mission is part of the IPPF, it does not fall within either the mandatory or recommended guidance.

Question 48

IPPF Mandatory guidance consists of….

Answer 48

• Definition of Internal Auditing
• Core Principles
• Code of Ethics
• International Standards

Question 49

What do the mandatory and recommended guidance elements of the IPPF support?

Answer 49

All of the mandatory and recommended guidance elements of the IPPF support the achievement of the Mission.

Question 50

What do the mission, definition and core principles articulate together?

Answer 50

Taken together, the Mission, Definition and Core Principles of internal auditing articulate the purpose of internal auditing, the activities performed, and the key principles that guide the internal audit activity.

Question 51

Conformance with __________ and ___________ will ensure conformance with the the Definition and Core Principles.

Answer 51

Standards and Code of Ethics

The Definition and Core Principles are amongst the mandatory elements of the IPPF. They are also encapsulated within the Standards and Code of Ethics.

Question 52

Conformance with the Standards and Code of Ethics will ensure conformance with the _____________ and ______________.

Answer 52

The Definition and Core Principles.

The Definition and Core Principles are amongst the mandatory elements of the IPPF. They are also encapsulated within the Standards and Code of Ethics.

Question 53

What is the mission of Internal Audit?

Answer 53

To enhance and protect organisational value by providing risk-based and objective assurance, advice and insight.

Question 54

What does the Mission in IPPF highlight?

Answer 54

The Mission highlights the important role that internal auditors have to play in helping to create a better future for their organisations, by enhancing and protecting organisational value.

Question 55

What is the definition of Internal Auditing?

Answer 55

Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organisation’s operations. It helps an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.

Question 56

Is the definition focused on the present?

Answer 56

No, it is future-focused.

Question 57

Why is it important for IA to be future-focused in terms of its Definition?

Answer 57

Internal audit is a catalyst for improvement and ultimately helps an organisation accomplish its objectives.

Question 58

Explain what Independent means in terms of IA definition.

Answer 58

The freedom from condition that threathens the ability of the internal audit activity to carry out internal audit responsibilities in an unbiased manner.

Question 59

Explain what Objective means in terms of IA definition.

Answer 59

An unbiased mental attitude that allows internal auditors to perform engagements in such a manner that they believe in their work product and that no quality conmpromises are made. Objectivity requires that internal auditors do not subordinate their judgment on audit matters to others.

Question 60

Explain what Assurance service means in terms of IA definition.

Answer 60

An objective examination of evidence for the purpose of providing an independent assessment on governance, risk management and control processes for the organisation. Examples may include financial, performance, compliance, system security and due diligence engagements.

Question 61

Explain what Consulting services means in terms of IA definition.

Answer 61

Advisory and related client service activities, the nature and scope of which are agreed with the client, are intended to add value and improve an organisation’s governance, risk management and control processes without the internal auditor assuming management responsibility.

Question 62

Explain what Add value means in terms of IA definition.

Answer 62

The internal audit activity adds value to the organisation (and its stakeholders) when it provides objective and relevant assurance, and contributes to the effectiveness and efficiency of governance, risk management and control process.

Question 63

Explain what Risk management means in terms of IA definition.

Answer 63

A process to identify, assess, manage and control potential events or situations to provide reasonable assurance regarding the achievement of the organisation’s objectives.

Question 64

Explain what Control means in terms of IA definition.

Answer 64

Any action taken by management, the board and other parties to manage risk and increase the likelihood that established objectives and goals will be achieved. Management plans, organises and directs the performance of sufficient actions to provide reasonable assurance that objectives and goals will be achieved.

Question 65

Explain what Governance means in terms of IA definition.

Answer 65

The combination of processes and structures implemented by the board to inform, direct, manage, and monitor the activities of the organization toward the achievement of its objectives.​

Question 66

Explain the difference between Assurance services and Consulting services.

Answer 66

Assurance services Consulting services Involve the internal auditor’s objective assessment of evidence to provide opinions or conclusions regarding an entity, operation, function, process, system, or other subject matters. Advisory in nature and are generally performed at the specific request of an engagement client. The nature and scope of an assurance engagement are determined by the internal auditor. The nature and scope of the consulting engagement are subject to agreement with the engagement client.

Generally, three parties are participants in assurance services:

1. the person or group directly involved with the entity, operation, function, process, system, or other subject matter — the process owner,
2. the person or group making the assessment — the internal auditor, and
3. the person or group using the assessment — the user.

Consulting services generally involve two parties:

1. the person or group offering the advice — the internal auditor, and
2. the person or group seeking and receiving the advice — the engagement client.

When performing consulting services, the internal auditor should maintain objectivity and not assume management responsibility.

Question 67

What is seen as the core role of internal auditing?

Answer 67

Assurance services.

Question 68

What similarities can you spot in the mission and definition?

Mission:
To enhance and protect organisational value by providing risk-based and objective assurance, advice and insight.

Definition:
Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organisation’s operations. It helps an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.

Answer 68

Although the terminology varies slightly, the Definition supports the key concepts promulgated in the Mission.

The Definition provides extra detail on the focus of internal audit, highlighting that it helps an organisation improve the effectiveness of risk management, control, and governance processes.

Question 69

Which core principles promulgate that internal auditing is future-focused and promotes improvement within organisations?

Answer 69

9. Is insightful, proactive, and future-focused.
10. Promotes organisational improvement.

Question 70

Which part of IPPF is this? What internal audit aspires to achieve within organisations.

Answer 70

Mission

Question 71

Which part of IPPF is this? Statement of fundamental purpose, nature and scope of internal auditing,

Answer 71

Definition of Internal Auditing

Question 72

Which part of IPPF is this? Fundamental to the way an internal audit function operates.

Answer 72

Core Principles

Question 73

What element of the IPPF does the following statement derive from:

To enhance and protect organisational value by providing risk-based and objective assurance, advice and insight?

Answer 73

The Mission Statement provides a clear and succinct description of what internal audit aspires to achieve within organisations.

Question 74

True or false? The Mission is part of the mandatory guidance.

Answer 74

False. The Mission is not included in the mandatory or recommended guidance.

Question 75

Is validating amounts in the financial statements a core principle of Internal Audit?

Answer 75

No. It is a core role of external audit to validate amounts in the financial statements. This is not a core focus for internal audit.

Question 76

True or false?

The Glossary provides definitions of words used within the Standards and is part of the recommended guidance within the IPPF.

Answer 76

False. The Glossary is part of the Standards and therefore falls within the mandatory guidance.

Question 77

Why is a code of ethics necessary?

Answer 77

A code of ethics is necessary and appropriate for the profession of internal auditing, founded as it is on the trust placed in its objective assurance on risk management, control, and governance.

Question 78

Who does the code of ethics apply to?

Answer 78

The Code of Ethics applies to both individuals and entities that provide internal auditing services.

Question 79

What are the rules of conduct and what are they there for?

Answer 79

Integrity, objectivity, confidentiality, competency.

The rules of conduct describe behaviour norms expected of internal auditors. These rules are an aid to interpreting the principles into practical applications and are intended to guide the ethical conduct of internal auditors.

The rules of conduct should be considered as examples in the application of the principles. It is therefore not sufficient to only follow the stated rules of conduct. You must ensure that you also apply the ethical principles in every aspect of your work.

Question 80

Integrity - What are the rules of conduct?

Answer 80

Principle: The Integrity of internal auditors establishes trust and thus provides the basis for reliance.

Rules of conduct

Internal auditors:

1. 1 Shall perform their work with honesty, diligence and responsibility.
2. 2 Shall observe the law and make disclosures expected by the law and the profession.
3. 3 Shall not knowingly be a party to any illegal activity, or engage in acts that are discreditable to the profession of internal auditing or to the organisation.
4. 4 Shall respect and contribute to the legitimate and ethical objectives of the organisation.

Question 81

Objectivity - What are the rules of conduct?

Answer 81

Rules of conduct

Internal auditors:

2. 1 Shall not participate in any activity or relationship that may impair or be presumed to impair their unbiased assessment. This participation includes those activities or relationships that may be in conflict with the interests of the organisation.
3. 2 Shall not accept anything that may impair or be presumed to impair their professional judgement.
4. 3 Shall disclose all material facts known to them that, if not disclosed, may distort the reporting of activities under review.

Question 82

Explain the principle of Objectivity.

Answer 82

Internal auditors exhibit the highest level of professional objectivity in gathering, evaluating, and communicating information about the activity or process being examined. Internal auditors make a balanced assessment of all the relevant circumstances and are not unduly influenced by their own interests or by others in forming judgements.

Question 83

Explain the principle of Integrity.

Answer 83

Principle: The Integrity of internal auditors establishes trust and thus provides the basis for reliance.

Question 84

Explain the principle of Confidentiality.

Answer 84

Principle: Internal auditors respect the value and ownership of information they receive and do not disclose information without appropriate authority unless there is a legal or professional obligation to do so.

Question 85

Confidentiality - What are the rules of conduct?

Answer 85

Internal auditors:

3. 1 Shall be prudent in the use and protection of information acquired in the course of their duties.
4. 2 Shall not use information for any personal gain or in any manner that would be contrary to the law or detrimental to the legitimate and ethical objectives of the organisation.

Question 86

Explain the principle of Competency.

Answer 86

Principle: Internal auditors apply the knowledge, skills and experience needed in the performance of internal auditing services.

Question 87

Competency - What are the rules of conduct?

Answer 87

Rules of conduct

Internal auditors:

4. 1 Shall engage only in those services for which they have the necessary knowledge, skills and experience.
5. 2 Shall perform internal auditing services in accordance with the International Standards for the Professional Practice of Internal Auditing.
6. 3 Shall continually improve their proficiency and the effectiveness and quality of their services.

Question 88

If your own organisation has a Code of Ethics, do you need to compyl to the one in IPPF?

Answer 88

Yes. Where this is the case, internal auditors must conform to the Code of Ethics in the IPPF in addition to any codes that that are provided by their organisation.

Question 89

True or false?

Following all the rules of conduct within the Code of Ethics will ensure conformance with the ethical principles.

Answer 89

False.

The rules of conduct describe behaviour norms expected of internal auditors. The rules of conduct should be considered as examples in the application of the principles. It is therefore not sufficient to only follow the stated rules of conduct. As an internal auditor, you must ensure that you also apply the ethical principles in every aspect of your work.

Question 90

Rule 2.2 states:

Internal auditors shall not accept anything that may impair or be presumed to impair their professional judgment

Background:

Nishi is performing an audit of the buying department. The buying manager offered Nishi free hospitality tickets to a sporting event as they were surplus to requirements.

Nishi accepted the tickets as they would be wasted otherwise, but resolved that she would not allow this to influence her work in any way.

True or false?

Nishi has failed to conform with Code of Ethics Rule 2.2.

Answer 90

The Rule includes ‘presumed to impair’. Perceptions are important, so Nishi’s resolution is not sufficient to conform with the Rule.

Question 91

What are the purposes of the Standards?

Answer 91

The purposes of the Standards are to:

• guide adherence with the mandatory elements of the IPPF
• provide a framework for performing and promoting a broad range of value-added internal auditing services
• establish the basis for the evaluation of internal audit performance
• foster improved organisational processes and operations.

Question 92

Name all attribute standards and their headlines.

Answer 92

1000 Purpose, Authority and Responsibility
1010 Recognising Mandatory Guidance in the Internal Audit Charter

1100 Independence and Objectivity
1110 Organisational Independence
1111 Direct Interaction with the Board
1112 Chief Audit Executive Roles Beyond Internal Auditing
1120 Individual Objectivity
1130 Impairment to Independence or Objectivity

1200 Proficiency and Due Professional Care
1210 Proficiency
1220 Due Professional Care
1230 Continuing Professional Development

1300 Quality Assurance and Improvement Programme
1310 Requirements of the Quality Assurance and Improvement Programme
1311 Internal Assessments
1312 External Assessments

1320 Reporting on the Quality Assurance and Improvement Programme
1321 Use of Conforms with the International Standards for the Professional Practice of Internal Auditing
1322 Disclosure of Non-conformance

Question 93

What are the main headlines for standards: 1000, 1100, 1200, 1300

Answer 93

1000 Purpose, Authority and Responsibility
1100 Independence and Objectivity
1200 Proficiency and Due Professional Care
1300 Quality Assurance and Improvement Programme

Question 95

What are the purpose of the Standards?

Answer 95

The purposes of the Standards are to:

guide adherence with the mandatory elements of the IPPF

provide a framework for performing and promoting a broad range of value-added internal auditing services

establish the basis for the evaluation of internal audit performance

foster improved organisational processes and operations.

Question 96

Talk about the global applicability of the Standards.

Answer 96

The Standards are based on high level principles and are designed so that they can be applied within any organisational environment.

While differences may affect the practice of internal auditing in each environment, conformance with the Standards is essential in meeting your responsibilities both as an internal auditor and an internal audit activity.

Question 97

What should you do if a regulation applied to the business you work in is in friction with a IA Standard?

Answer 97

If you or the internal audit activity are unable to conform with certain parts of the Standards because of regulations, you and the internal audit activity should conform with all other parts of the Standards. You should disclose which Standards you have conformed and those you haven’t and why.

Question 98

What should you do if the Standards are used in conjunction with requirements issued by other bodies?

Answer 98

If the Standards are used in conjunction with requirements issued by other bodies, the internal audit activity should cite it uses other requirements. In such a case, if the internal audit activity indicates conformance with the Standards and inconsistencies exist between the Standards and other requirements, internal auditors and the internal audit activity must conform with the Standards. The activity may conform with the other requirements if they are more stringent.

Question 99

Which part of the IPPF is the glossary part of?

Answer 99

The Standards

Question 100

The Standards consist of statements of _______ and intrepretations clarifying ______?

Answer 100

The Standards are a set of principles-based requirements consisting of:

• statements of core requirements for the professional practice of internal auditing, and for evaluating the effectiveness of performance, that are internationally applicable at organisational and individual levels, and
• interpretations clarifying terms or concepts within the Standards.

Question 101

What do you need to consider to apply the Standards correctly?

Answer 101

The specific meanings from the glossary. The Standards employ terms as defined in the glossary.

Question 102

How can you tell if a Standard has an unconditional requirement and where conformance is expected?

Answer 102

The Standards use the word ‘must’ to specify an unconditional requirement and the word ‘should’ where conformance is expected unless, when applying professional judgment, circumstances justify deviation.

Question 103

What are the Standards divided into?

Answer 103

The Standards are divided into Attribute and Performance Standards.

Question 104

What are Implementation Standards there for?

Answer 104

Implementation Standards expand upon the Attribute and Performance Standards by providing the requirements applicable to assurance or consulting services.

Question 105

What is the role of Attribute Standards?

Answer 105

Attribute Standards address the attributes of the internal audit function.

Question 106

What is the role of Performance Attributes?

Answer 106

“For me, I like to think of them as more hands-on, so how do I do my audit? What sort of things do I need to think about when I’m drafting terms of reference or a letter of engagement? What are the challenges I might face when I’m communicating the results of the audit?”

MANNER

Question 107

What are these?

Purpose, authority and responsibility

Independence and objectivity

Proficiency and due professional care

Quality assurance and improvement programme

Answer 107

The Attribute Standards cover the following topics:

1000 Purpose, authority and responsibility

1100 Independence and objectivity

1200 Proficiency and due professional care

1300 Quality assurance and improvement programme

Question 108

What are these?

Managing the internal audit activity

Nature of work

Engagement planning

Performing the engagement

Communicating results

Monitoring progress

Communicating the acceptance of risks

Answer 108

The Performance Standards cover the following topics:

2000 Managing the internal audit activity

2100 Nature of work

2200 Engagement planning

2300 Performing the engagement

2400 Communicating results

2500 Monitoring progress

2600 Communicating the acceptance of risks

Question 109

What does .An or .Cn mean at the end of a Standard?

Answer 109

Implementation Standards provide the requirements applicable to assurance or consulting services. The A and C denote assurance and consulting services.

The final digit (denoted by ‘n’ above) is simply a sequence number.

For example, 1000.A1 is the first Implementation Standard that provides requirements for applying Standard 1000 to the provision of Assurance services.

Question 110

What is the importance of e.g. boards in conforming to the Standards?

Answer 110

The Standards are written in such a way that they place responsibility for their conformance on chief audit executives and do not directly place requirements on organisations. However, in order to implement some of the Standards effectively, chief audit executives will need the support of their boards or governing bodies.

Question 111

Which two parts of IPPF encompass all mandatory elements of the IPPF?

Answer 111

The Standards, together with the Code of Ethics, encompass all mandatory elements of the IPPF.

Question 112

The principles contained within the Definition and the Core Principles are reflected in __________ and ____________.

Answer 112

the principles contained within the Definition and the Core Principles are reflected in the Standards and Code of Ethics

Question 113

the principles contained within ________ and _________ are reflected in the Standards and Code of Ethics

Answer 113

the principles contained within the Definition and the Core Principles are reflected in the Standards and Code of Ethics

Question 114

To conform with all mandatory elements of the IPPF, you must….

Answer 114

Conform with the Code of Ethics and the Standards.

Question 115

The two main categories of Standards are:

(a) Assurance and Consultancy Standards
(b) Attribute and Performance Standards
(c) Performance and Implementation Standards
(d) Attribute and Implementation Standards

Answer 115

(b) Attribute and Performance Standards

Question 116

What are Implementation Standards expanding on?

Answer 116

Implementation Standards expand upon the Attribute and Performance Standards by providing the requirements applicable to assurance or consulting services.

Question 117

True or false: The chief audit executive is responsible for deciding whether the internal audit service should conform with the International Standards.

Answer 117

False. The Standards are a mandatory part of the IPPF. Chief audit executives are accountable for the internal audit activity’s overall conformance with the Standards.

Question 118

True or false: All Standards include a statement of core requirements. Some have an interpretation to provide clarification. Many use words that are defined in the Glossary.

Answer 118

True.

Question 119

True or false: All three components of the Standards (statements, interpretations, and Glossary meanings) are mandatory.

Answer 119

True. All components of the Standards (statements, interpretations, and glossary meanings) taken together form the mandatory requirements.

Question 120

What do all Standards include?

Answer 120

Core requirements.

Question 121

What are the categories in recommended guidance and what are they there for?

Answer 121

There are two categories of recommended guidance - implementation and supplemental. Recommended guidance describes practices for the effective implementation of the mandatory elements of the IPPF.

Question 122

What is the role of implementation guidance?

Answer 122

Implementation guides help you apply the Standards.

Question 123

What do implementation guide not detail?

Answer 123

They collectively address internal auditing’s approach, methodologies, and consideration, but do not detail processes or procedures.

Question 124

What do implementation guides address?

Answer 124

Implementation guides help you apply the Standards. They collectively address internal auditing’s approach, methodologies, and consideration, but do not detail processes or procedures.

Question 125

Explain the difference between Implementation Standards and Implementation Guides?

Answer 125

Implementation Standards are part of the mandatory guidance. They describe the application of individual Standards to assurance and consulting services.

Implementation guides describe the ways in which each individual main Standard can be implemented. They also provide ideas on how conformance with each Standard might be demonstrated.

Question 126

What does supplemental guidance provide?

Answer 126

Supplemental guidance provides detailed guidance for conducting internal audit activities.

They include topical areas, sector-specific issues, as well as processes and procedures, tools and techniques, programs, step-by-step approaches, and examples of deliverables.

Question 127

Give 3 examples of supplemental guides.

Answer 127

Practice Guides - General

Practice Guides - Financial Services

Practice Guides - Public Sector

Practice Guides - GTAGs

Question 128

What are and what can you find in General Practice Guides?

Answer 128

There are Practice Guides that are not sector specific or IT related. By way of example, there is a Practice Guide on Auditing Culture. You will find this useful when you are working on an engagement which includes some aspect of organisational culture.

Question 129

What do Financial Services Practice Guides provide?

Answer 129

These Practice Guides provide guidance on internal audit work within the financial services. An example is the guide on Auditing Capital Adequacy and Stress Testing for Banks.

Question 130

What do Public Sector Practice Guides provide?

Answer 130

These guides provide supplemental guidance on internal audit work within the public sector. An example is the guide on Unique Aspects of Internal Auditing in the Public Sector.

Question 131

What is GTAGs short for?

Answer 131

The Global Technology Audit Guides

Question 132

What do GTAGs Practice Guides provide?

Answer 132

The Global Technology Audit Guides (GTAGs) are written in straightforward business language and address issues related to information technology (IT) management, control, and security.

Question 133

Practice guides are part of….?

Answer 133

Practice Guides are the main type of supplementary guidance. Supplementary guidance is one of the two categories of recommended guidance.

Question 134

TRUE OR FALSE? Implementation guides provide help with applying the Standards to conducting internal audit work. Implementation guides therefore relate to the Performance Standards and are not relevant to Attribute Standards.

Answer 134

False. There is an implementation guide to support each main Attribute and Performance Standard, although there are not separate guides for the Implementation Standards.

Question 135

True or false? There is an implementation guide associated with each main Standard.

Answer 135

True.

Question 136

True or false? Implementation guides assist internal auditors in applying the Standards.

Answer 136

True.

Question 137

Supplemental Guidance includes different types of practice guides. Name them.

Answer 137

Practice Guides – General

Practice Guides – Financial Services

Practice Guides – Public sector

Practice Guides – GTAG ®

Question 138

Which standard is this?

__________________ of the internal audit activity must be formally defined in an internal audit charter, consistent with the Mission of Internal Audit and the mandatory elements of the International Professional Practices Framework (the Core Principles for the Professional Practice of Internal Auditing, the Code of Ethics, the Standards, and the Definition of Internal Auditing). The chief audit executive must periodically review the internal audit charter and present it to senior management and the board for approval.

Answer 138

Standard 1000 Purpose, Authority and Responsibility

Question 139

When is audit committee an acceptable substitude for the board?

Answer 139

If the board has delegated responsibility for oversight of internal audit to an audit committee.

Question 140

Which Standard is this?

The mandatory nature of the Core Principles for the Professional Practice of Internal Auditing, the Code of Ethics, the Standards, and the Definition of Internal Auditing must be recognised in the internal audit charter. The chief audit executive should discuss the Mission of Internal Audit and the mandatory elements of the International Professional Practices Framework with senior management and the board.

Answer 140

Standard 1010 Recognising Mandatory Guidance in the Internal Audit Charter

Question 141

How is the independence of the internal auditing activity achieved?

Answer 141

The independence of the internal auditing activity is largely achieved from the reporting line of the chief audit executive.

Question 142

Which Standard is this?

The chief audit executive must report to a level within the organisation that allows the internal audit activity to fulfill its responsibilities. The chief audit executive must confirm to the board, at least annually, the organisational independence of the internal audit activity.

Answer 142

Standard 1110 Organisational Independence

Question 143

Organisational independence is effectively achieved when the chief audit executive reports functionally to the board. Name 5 examples of functional reporting to the board involve the board.

Answer 143

1. ◾ approving the internal audit charter
2. ◾ approving the risk-based internal audit plan
3. ◾ approving the internal audit budget and resource plan
4. ◾ receiving communications from the chief audit executive on the internal audit activity’s performance relative to its plan and other matters
5. ◾ approving decisions regarding the appointment and removal of the chief audit executive
6. ◾ approving the remuneration of the chief audit executive
7. ◾ making appropriate inquiries of management and the chief audit executive to determine whether there are inappropriate scope or resource limitations.

Question 144

How is objectivity achieved?

Answer 144

Objectivity relates to the state of mind of individual internal auditors.

• having an impartial, unbiased attitude, and
• avoiding any conflict of interest.

These aspects are linked in that if a conflict of interest exists (Independence), it might be difficult to have an impartial and unbiased attitude.

Question 145

Which Standard is this?

Internal auditors must have an impartial, unbiased attitude and avoid any conflict of interest.

Answer 145

Standard 1120 Individual Objectivity

Question 146

Standards that individual internal auditors are accountable for conforming to are

Answer 146

Standard 1200 Proficiency and Due Professional Care states that ‘engagements must be performed with proficiency and due professional care.’

This Standard breaks down into three areas: 1210 Proficiency, 1220 Due Professional Care and 1230 Continuing Professional Development

Question 147

Which Standard is this?

Internal auditors must possess the knowledge, skills and other competencies needed to perform their individual responsibilities. The internal audit activity collectively must possess or obtain the knowledge, skills and other competencies needed to perform its responsibilities.

Answer 147

Standard 1210 Proficiency

Question 148

Which Standard?

Internal auditors must apply the care and skill expected of a reasonably prudent and competent internal auditor. Due professional care does not imply infallibility.

Answer 148

Standard 1220 Due Professional Care

Question 149

Which Standard?

Internal auditors must enhance their knowledge, skills and other competencies through continuing professional development.

Answer 149

Standard 1230 Continuing Professional Development

Question 150

Which Standard?

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

Answer 150

Standard 1300 Quality Assurance and Improvement Programme

Question 151

Which Standard?

The chief audit executive must communicate the results of the quality assurance and improvement programme to senior management and the board. Disclosure should include:

◾ the scope and frequency of both the internal and external assessments,

◾ the qualifications and independence of the assessor(s) or assessment team, including potential conflicts of interest,

◾ conclusions of assessors, and

◾ corrective action plans.

Answer 151

Standard 1320 Reporting on the Quality Assurance and Improvement Programme

Question 152

Fill the blanks:

2000 Managing the ______

2100 Nature of ________

2200 _______ planning

2300 Performing the ___________

2400 Communicating _______

2500 ________ progress

2600 Communicating __________

Answer 152

2000 Managing the internal audit activity

2100 Nature of work

2200 Engagement planning

2300 Performing the engagement

2400 Communicating results

2500 Monitoring progress

2600 Communicating the acceptance of risks

Question 153

Standard 2100 Nature of Work breaks down into?

Answer 153

2110 Governance
2120 Risk Management
2130 Control

These are important Standards, setting out internal audit’s role in relation to these key activities (governance, risk management and control).

Question 154

True or false?

An internal audit charter can be a useful way to set out the role of an internal audit activity, but it is not mandatory.

Answer 154

False.

Question 155

True or false?

The mandatory parts of the IPPF (Core Principles for the Professional Practice of Internal Auditing, the Code of Ethics, the Standards, and the Definition of Internal Auditing) can be taken as read and do not need explicit mention in the internal audit charter.

Answer 155

False.

Standard 1010 begins:

The mandatory nature of the Core Principles for the Professional Practice of Internal Auditing, the Code of Ethics, the Standards, and the Definition of Internal Auditing must be recognised in the internal audit charter…

Question 156

Which of the following are examples of functional reporting to the board?

Tick all that apply.

Approving the:

• internal audit charter
• risk-based internal audit plan
• internal audit budget and resource plan
• remuneration of the chief audit executive

Answer 156

All apply.

Question 157

True or false?

A sufficiently high level of independence will guarantee that the objectivity requirements for internal audit activities are met.

Answer 157

False.

Independence and objectivity are related; a high level of independence supports the ability to be objective. However, independence is not sufficient to guarantee that all of the objectivity requirements will be met.

Objectivity appears in the Mission of Internal Audit and all of the mandatory elements. It is important to conform with all of the specific objectivity requirements in addition to the requirements related to independence.

Question 158

why do you believe that conformance with various aspects of the IPPF is important?

Answer 158

Your answer could have included:

to ensure a degree of consistency in the way in which internal auditing is conducted around the world in diverse legal and cultural environments

to ensure consistency within individual internal audit activities

to ensure internal auditing is conducted with a high level of professional competence

to ensure internal auditing is conducted based upon sound ethical principles

to enable stakeholders to have confidence in the internal audit services

to improve the quality, value, and effectiveness of internal audit services

ultimately, conformance with the IPPF will help internal audit activities protect and enhance organisational value ie accomplish their mission.

Question 159

What are Position Papers?

Answer 159

Position Papers assist a wide range of interested parties, but are primarily designed to inform internal audit stakeholders on issues of importance to The IIA and the profession. Their focus is generally related to significant governance, risk, or control issues, and delineating the associated roles and responsibilities of internal auditing.

Question 160

True or false? Internal audit should operate to the highest level of ethical and professional competencies to ensure consistent and accurate assurance delivery.

Answer 160

True.

Question 161

True or false?

Every professional internal auditor and internal audit activity should follow and conform to the IIA’s International Professional Practices Framework (IPPF).

Question 162

True or false? Internal audit should operate under a charter that adopts the IPPF, and stakeholders should expect and accept nothing less.

Question 163

True or false? Stakeholders should require the internal audit activity maintain a Quality Assurance and Improvement Program (QAIP) and demand regular external quality-assurance reviews.

Question 164

True or false?

Conformance with the IPPF helps ensure internal auditing is conducted based upon sound ethical principles.

Answer 164

True.

There are many reasons why conformance with the IPPF is important, including:

ensuring internal auditing is conducted with a high level of professional competence

enabling stakeholders to have confidence in the internal audit services

improving the quality, value, and effectiveness of internal audit services.