What is the primary reason that audit supervision includes approval of the engagement report?
Correct Answer:D
The primary reason for audit supervision, including the approval of the engagement report, is to ensure that the findings presented in the report are substantiated by adequate and appropriate evidence. This step is crucial to maintain the credibility and reliability of the audit process and its outcomes.
✑ Substantiation of Findings: Ensuring that findings are substantiated helps in
providing a clear and defensible basis for the conclusions and recommendations made in the report.
✑ Audit Quality: This step ensures the quality and integrity of the audit process,
confirming that the evidence collected during the audit is sufficient and appropriate to support the findings.
✑ Credibility: By substantiating findings, the report gains credibility, which is essential
for the stakeholders who rely on the audit report for decision-making.
References:
✑ "Internal Audit Standards and Procedures," which outlines the importance of evidence substantiation in audit reports .
The audit plan requires a review of the testing procedures used in pre-production of a large information system prior to its live launch. If the chief audit executive (CAE) is uncertain that the current audit team has all the required knowledge to conduct the engagement, which of the following would be the most appropriate course of action for the CAE to take to preserve independence?
Correct Answer:C
If the chief audit executive (CAE) is uncertain that the current audit team has all the required knowledge to conduct the engagement, the most appropriate course of action is to use an external service provider. This helps preserve the independence and objectivity of the internal audit function.
✑ Expertise: External service providers bring specialized knowledge and expertise
that may not be available within the internal team.
✑ Independence: Utilizing an external provider ensures that the audit maintains its independence and objectivity, avoiding any potential conflicts of interest.
✑ Quality: Ensures that the audit engagement is conducted with the highest standards, leveraging the external provider's experience and skills.
References:
✑ "Internal Audit and Assurance," which outlines the benefits and considerations of engaging external service providers for specialized audit tasks.
According to Maslow's hierarchy of needs theory, which of the following best describes a strategy where a manager offers an assignment to a subordinate specifically to support his professional growth and future advancement^
Correct Answer:B
According to Maslow's hierarchy of needs theory, self-fulfillment or self-actualization represents the highest level of human motivation, where an individual seeks to achieve personal growth, professional development, and realization of their potential. Offering an assignment to a subordinate to support their professional growth and future advancement aligns with this concept, as it helps the individual achieve a sense of self-fulfillment.
Reference: Maslow's Hierarchy of Needs Theory
A newly appointed chief audit executive (CAE) started analyzing the organization's policies in an attempt to customize them to address internal audit specifics. Which of the following organizationwide practices is most likely to be acceptable to the CAE?
Correct Answer:A
The statistical model indicates that daily sales have a direct relationship with the cost of ingredients used and an inverse relationship with rainy days.
✑ Option A: On a rainy day, if total sales are greater than expected compared to the
cost of ingredients used, it may indicate discrepancies that could be a sign of employee theft. For instance, if ingredients are used but not reflected in the sales, it suggests that items might be missing (stolen).
✑ Option B: On a sunny day, lower-than-expected sales compared to the cost of
ingredients could indicate wastage but not necessarily theft.
✑ Option C and D: Both scenarios where total sales and the cost of ingredients are higher or lower than expected do not specifically point to theft without additional context.
According to IIA guidance, which of the following statements is true regarding reporting the results of the quality assurance and improvement program?
Correct Answer:D
The IIA's International Standards for the Professional Practice of Internal Auditing (Standards) provide guidance on the reporting requirements of the quality assurance and improvement program. According to Standard 1320, "The chief audit executive must communicate the results of the quality assurance and improvement program to senior management and the board." This communication must include the results of both internal and external assessments and ongoing monitoring. Specifically, the results of ongoing monitoring of the internal audit activity??s performance should be reported to senior management and the board at least annually. This ensures that the internal audit activity maintains its proficiency, enhances its effectiveness, and complies with the Standards.
Reference: IIA Standard 1320