FOUNDATIONS OF INTERNAL AUDITING

Question 1

What is the Mission of Internal Audit?

Answer 1

To enhance and protect organizational value by providing risk-based and objective assurance, advice, and insight.
The Mission of Internal Audit articulates what internal audit aspires to accomplish within an organization. Its place in the New IPPF is deliberate, demonstrating how practitioners should leverage the entire framework
to facilitate their ability to achieve the Mission.

Question 2

What are the elements of Mandatory

Guidance?

Answer 2

1) Core Principles for the Professional Practice of Internal Auditing
2) Definition of Internal Auditing
3) Code of Ethics

Question 3

What are the purposes
of the Standards?

Answer 3

1) Guide adherence with the mandatory elements of the International Professional Practices Framework.
2) Provide a framework for performing and promoting a broad range of value-added internal auditing services.
3) Establish the basis for the evaluation of internal audit performance.
4) Foster improved organizational processes and operations.

Question 4

What do the Standards consist of?

Answer 4

1) Statements of core requirements for the professional practice of internal auditing and for evaluating the effectiveness of performance that are internationally applicable at organizational and individual levels.
2) Interpretations clarifying terms or concepts within
the Standards.

Question 5

What are the two types of Recommended

Guidance?

Answer 5

1) Implementation Guidance

2) Supplemental Guidance

Question 6

What are
Implementation Guides?

Answer 6

Implementation Guides assist internal auditors in applying the Standards. IGs collectively address internal auditing’s approach, methodologies, and consideration, but do not detail processes or procedures.

Question 7

What is Supplemental Guidance?

Answer 7

Supplemental Guidance provides detailed guidance for conducting internal audit activities. These 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 8

What is the definition of Internal Auditing?

Answer 8

Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.
The Definition of Internal Auditing states the
fundamental purpose, nature, and scope of internal auditing.

Question 9

What writes the Internal Audit Charter and who

approves it?

Answer 9

The charter should be written by (and periodically reviewed by) the CAE and approved by senior management and the board or audit committee.

Question 10

What are the seven sections in the Internal Audit Charter?

Answer 10

1) Purpose and Mission
2) Standards for the Professional Practice of Internal Auditing
3) Authority
4) Independence and Objectivity
5) Scope of Internal Audit Activities
6) Responsibility
7) Quality Assurance and Improvement Program

Question 11

What is the definition of Assurance Services?

Answer 11

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

Question 12

What is the definition of Consulting Services?

Answer 12

“Advisory and related client services, the nature and scope of which are agreed upon with the client and which are intended to add value and improve an organization’s operations. Examples include counsel, advice, facilitation, and training.”

Question 13

What Consulting Services may internal auditors

perform?

Answer 13

The Standards state that internal auditors can only perform consulting services specifically defined in the internal audit charter.

Question 14

What is the difference between Assurance and Consulting engagements?

Answer 14

In an assurance engagement, the auditor provides an assessment and states an opinion about whether or not something within the company is operating or performing correctly. The auditor should be objective in the investigation and independent in the decision.
In a consulting engagement, the auditor provides advice
or makes a suggestion.

Question 15

What are the three types of Standards?

Answer 15

1) Attribute Standards
2) Performance Standards
3) Implementation Standards

Question 16

What is the Code of Ethics?

Answer 16

“The Code of Ethics states the principles and expectations governing the behavior of individuals and organizations in the conduct of internal auditing. It describes the minimum requirements for conduct, [sic] and behavioral expectations rather than specific
activities.”

Question 17

What are the four principles in the Code of Ethics?

Answer 17

1) Integrity
2) Objectivity
3) Confidentiality
4) Competency

Question 18

What are the Rules of Conduct related to Integrity?

Answer 18

Internal auditors:
• Shall perform their work with honesty, diligence, and responsibility.

• Shall observe the law and make disclosures expected
  by the law and the profession.
• 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 organization.
• Shall respect and contribute to the legitimate and
  ethical objectives of the organization.

Question 19

What are the Rules of Conduct related to Objectivity?

Answer 19

Internal auditors:
• 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 organization.

• Shall not accept anything that may impair or be
presumed to impair their professional judgment.

• Shall disclose all material facts known to them that, if not disclosed, may distort the reporting of activities under review.

Question 20

What are the Rules of Conduct related to Confidentiality?

Answer 20

Internal auditors:
• Shall be prudent in the use and protection of information acquired in the course of their duties.

• 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 organization.

Question 21

What are the Rules of Conduct related to Competency?

Answer 21

Internal auditors:
• Shall engage only in those services for which they have the necessary knowledge, skills, and experience.

• Shall perform internal auditing services in accordance
  with the International Standards for the Professional Practice of Internal Auditing.
• Shall continually improve their proficiency and the
  effectiveness and quality of their services.

Question 22

What are the Core Principles for the

Professional Practice of Internal Auditing?

Answer 22

a) “Demonstrates integrity.
b) Demonstrates competence and due professional care.
c) Is objective and free from undue influence (independent).
d) Aligns with the strategies, objectives, and risks of the organization.
e) Is appropriately positioned and adequately resourced.
f) Demonstrates quality and continuous improvement.
g) Communicates effectively.
h) Provides risk-based assurance.
i) Is insightful, proactive, and future-focused.
j) Promotes organizational improvement.”