Unit 1.2

Question 1

The internal audit activity is effectively managed when:

Answer 1

It achieves the purpose and responsibility included in the internal audit charter.
It conforms with the Standards.
Its individual members conform with the Code of Ethics and the Standards.
It considers trends and emerging issues that could impact the organization.

Question 2

Management oversees the day-to-day operations of the internal audit activity, including the following administrative activities

Answer 2

Budgeting and management accounting
Human resource administration, including personnel evaluations and compensation
Internal communications and information flows
Administration of the internal audit activity’s policies and procedures

Question 3

Role of the Audit Committee na IA

Answer 3

Selecting or removing the CAE and setting his or her compensation
Approving the internal audit charter
Reviewing and approving the internal audit activity’s work plan
Ensuring that the internal audit activity is allocated sufficient resources
Resolving disputes between the internal audit activity and management
Communicating with the CAE, who attends all audit committee meetings
Reviewing the internal audit activity’s work product (e.g., interim and final engagement communications)
Ensuring that engagement results are given due consideration
Overseeing appropriate corrective action for deficiencies noted by the internal audit activity
Making appropriate inquiries of management and the CAE to determine whether audit scope or budgetary limitations impede the ability of the internal audit activity to meet its responsibilities

Question 4

Role of the Audit Committee na External Audit

Answer 4

Selecting the external auditing firm and negotiating its fee
Overseeing and reviewing the work of the external auditor
Resolving disputes between the external auditor and management
Reviewing the external auditor’s internal control and audit reports