Internal Auditing Standards

Question 1

These are fundamental principles and procedures that make
internal auditing a unique, disciplined and systematic activity

Answer 1

Internal Auditing Standards

Question 2

conducted in diverse legal and cultural environment; within organizations that vary in purpose, size, complexity, and structure; and by persons within or outside the organization.

Answer 2

Internal auditing

Question 3

The purpose of the Standards is to:

Answer 3

: Delineate basic principles that represent the practice of internal auditing.
: Provide a framework for performing and promoting a broad range of value-added internal auditing.
: Establish the basis for the evaluation of internal audit performance.
: Foster improved organizational processes and operations.

Question 4

The Standards are principles-focused, mandatory requirements consisting of:

Answer 4

: Statements of basic requirements for the professional practice of internal auditing and for evaluating the effectiveness or performance that are internationally applicable at organizational and individual levels.

: Interpretations that clarify terms or concepts within the Standards

Question 5

to specify an unconditional requirement

Answer 5

“Must”

Question 6

where conformance is expected unless, when applying professional judgment, circumstance justify deviation.

Answer 6

“Should”

Question 7

address the attributes of organizations and individuals performing internal auditing

Answer 7

Attribute standards

Question 8

address the characteristics of organizations and parties performing internal audit activities

Answer 8

Attribute standards

Question 9

describe the nature of internal auditing and provide quality criteria against which the performance of these services can be measured

Answer 9

Performance Standards

Question 10

1000

Answer 10

Purpose, Authority, and Responsibility

Question 11

Purpose, Authority, and Responsibility

Answer 11

1000

Question 12

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.

Answer 12

1000: Purpose, Authority, and Responsibility

Question 13

a formal document that defines the internal audit activity’s purpose, authority, and responsibility.

Answer 13

internal audit charter

Question 14

The nature of assurance services provided to the organization must be defined in the internal audit charter. If assurance are to be provided to parties outside the organization, the nature of these assurance must also be defined in the internal audit charter.

Answer 14

1000.A1

Question 15

The nature of consulting services must be defined in the internal audit charter.

Answer 15

1000.C1

Question 16

1010

Answer 16

Recognition of the Definition of Internal Auditing, the Code of Ethics, and the Standards in the Internal Audit Charter

Question 17

Recognition of the Definition of Internal Auditing, the Code of Ethics, and the Standards in the Internal Audit Charter

Answer 17

1010

Question 18

The mandatory nature of the Definition of Internal Auditing, the Code of Ethics, and the Standards must be recognized in the internal audit charter. The CAE should discuss the definition of internal auditing, the Code of Ethics, and the Standards with senior management and the board.

Answer 18

1010 – Recognition of the Definition of Internal Auditing, the Code of Ethics, and the Standards in the Internal Audit Charter

Question 19

1100

Answer 19

Independence and Objectivity

Question 20

Independence and Objectivity

Answer 20

1100

Question 21

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

Answer 21

1100 – Independence and Objectivity

Question 22

the freedom from conditions that threaten the ability of the internal audit activity to carry out internal audit responsibilities in an unbiased manner.

Answer 22

Independence

Question 23

To achieve the degree of independence necessary to effectively carry out the responsibilities of the internal audit activity, the CAE has direct and unrestricted access to senior management and the board. This ca be achieved through

Answer 23

a dual-reporting relationship.

Question 24

Threats to independence must be managed at the

Answer 24

individual auditor, engagement, functional, and organizational levels.

Question 25

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 compromises are made.

Answer 25

Objectivity

Question 26

1110

Answer 26

Organizational Independence

Question 27

Organizational Independence

Answer 27

1110

Question 28

The CAE must report to a level within the organization that allows the internal audit activity to fulfill its responsibilities. The CAE must confirm to the board, at least annually, the organizational independence of the internal audit activity.

Answer 28

1110 – Organizational Independence

Question 29

Examples of functional reporting to the board involve the board:

Answer 29

:Approving the internal audit charter.
:Approving the risk based internal audit plan.
:Receiving communications from the CAE on the interna audit activity’s performance relative to its plan and other matters.
:Approving decisions regarding the appointment and removal of the CAE.
:Making appropriate inquiries of management and the CAE to determine whether there are inappropriate scope or resource limitations.

Question 30

1111

Answer 30

Direct Interaction with the Board

Question 31

Direct Interaction with the Board

Answer 31

1111

Question 32

The CAE communicate and interact directly with the board.

Answer 32

1111 – Direct Interaction with the Board

Question 33

1120

Answer 33

Individual Objectivity

Question 34

Individual Objectivity

Answer 34

1120

Question 35

a situation in which an internal auditor who is in a position of trust has a competing professional or personal interest.

Answer 35

Conflict of Interest

Question 36

1130

Answer 36

Impairment to Independence or Objectivity

Question 37

Impairment to Independence or Objectivity

Answer 37

1130

Question 38

If independence or objectivity is impaired in fact or appearance, the details of the impairment must be disclosed to appropriate parties. The nature of the disclosure will depend on the impairment.

Answer 38

1130 – Impairment to Independence or Objectivity

Question 39

impairment to organizational independence and individual objectivity may include, but is not limited to

Answer 39

personal conflict of interest, scope limitations, restrictions on access to records, personnel, and properties, and resource limitations, such as funding.

Question 40

1200

Answer 40

Proficiency and Due Professional Care

Question 41

Proficiency and Due Professional Care

Answer 41

1200

Question 42

Engagement must be performed with proficiency and due professional care

Answer 42

1200 – Proficiency and Due Professional Care

Question 43

The Code of Ethics extends beyond the definition of internal auditing to include two essential components:

Answer 43

Principles and Rules of Conduct

Question 44

are relevant to the profession and practice of internal auditing: integrity, objectivity, confidentiality, and competency.

Answer 44

Principles

Question 45

describe behavioral 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.

Answer 45

Rules of conduct

Question 46

Proficiency

Answer 46

1210

Question 47

1210

Answer 47

Proficiency

Question 48

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 performed its responsibilities.

Answer 48

1210 - Proficiency

Question 49

a collective term that refers to the professional proficiency required of internal auditors to effectively carry out their professional responsibilities.

Answer 49

Knowledge, skills, and other competencies

Question 50

Due Professional

Answer 50

1220

Question 51

1220

Answer 51

Due Professional

Question 52

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 52

1220 – Due Professional

Question 53

. Exercising due professional care involves internal auditors being alert to the

Answer 53

to the possibility of fraud, intentional wrongdoing, errors and omissions, inefficiency, waste, ineffectiveness, and conflicts of interest

Question 54

This also involves internal auditors identifying inadequate controls and recommending improvements to promote conformance with acceptable procedures and practices.

Answer 54

Practice Advisory 1220-1: Due Professional Care

Question 55

1230

Answer 55

Continuing Professional Development

Question 56

Continuing Professional Development

Answer 56

1230

Question 57

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

Answer 57

1230 – Continuing Professional Development

Question 58

Quality Assurance and Improvement Standard

Answer 58

1300

Question 59

1300

Answer 59

Quality Assurance and Improvement Standard

Question 60

The CAE must develop and maintain a quality assurance and improvement program (QAIP) that covers all aspects of the internal audit activity.

Answer 60

1300 – Quality Assurance and Improvement Standard

Question 61

designed to enable an evaluation of the internal audit activity’s conformance with the definition of internal auditing and the Standards and an evaluation of whether internal auditors apply the Code of Ethics

the program also assesses the efficiency and effectiveness of the internal audit activity and identifies opportunities for improvement.

Answer 61

QAIP

Question 62

1310

Answer 62

Requirements of the Quality Assurance and Improvement Program

Question 63

Requirements of the Quality Assurance and Improvement Program

Answer 63

1310

Question 64

The CAE must develop and maintain a quality assurance and improvement program (QAIP) that covers all aspects of the internal audit activity.

Answer 64

1310 – Requirements of the Quality Assurance and Improvement Program

Question 65

an ongoing and periodic assessment of the entire spectrum of audit and consulting work performed by the internal audit activity. These ongoing and periodic assessments are composed of rigorous, comprehensive processes, continuous supervision and testing of internal audit and consulting work; the periodic validation of conformance with the definition of internal auditing, the Code of Ethics, and the Standards. This also includes ongoing measurement and analyses of performance metrics (e.g., internal audit plan accomplishment, cycle time, recommendations accepted, and customer satisfaction).

Answer 65

QAIP

Question 66

QAIPs include an evaluation of

Answer 66

• Conformance with the definition of internal auditing, the Code of Ethics, and the Standards, including timely corrective actions to remedy any significant instances of nonconformance.
  
  • Adequacy of the internal audit activity’s charter, goals, objectives, policies, and procedures.
  • Contribution to the organization’s governance, risk management, and control processes.
  • Compliance with applicable laws, regulations, and government or industry standards.
  • Effectiveness of continuous improvement activities and adoption of best practices.
  • The extend to which the internal audit activity adds value and improve the organizations.

Question 67

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

Answer 67

1120 – Individual Objectivity