Certified Internal Auditor Communication & Stakeholder Relations 3 ā Questions and Answers
Question 1: During an exit conference, management disputes a finding and provides additional evidence. The auditor should:
- Dismiss the evidence because the field work phase has ended
- Evaluate the new evidence and modify the finding if warranted (Correct answer)
- Issue the report as drafted and note the dispute in an appendix
- Escalate the dispute to the audit committee immediately
Correct answer: Evaluate the new evidence and modify the finding if warranted
Auditors have a professional obligation to consider new evidence even at the exit conference stage and update conclusions if the evidence changes the facts.
Question 2: An internal auditor is presenting to a board audience unfamiliar with audit terminology. Which communication strategy is MOST effective?
- Use technical audit jargon to demonstrate professional expertise
- Translate findings into business impact language the board understands (Correct answer)
- Provide a detailed methodology section before presenting findings
- Defer all explanations to supplemental written materials
Correct answer: Translate findings into business impact language the board understands
Tailoring communication to the audience's level of understandingāfocusing on business impact rather than technical jargonāensures the board can act on audit information.
Question 3: Which element of a formal audit observation is MOST important for helping management prioritize remediation?
- The name of the auditor who identified the finding
- The risk or impact associated with the condition (Correct answer)
- The date the control deficiency was first observed
- The number of transactions tested
Correct answer: The risk or impact associated with the condition
Clearly articulating the risk or impact of a finding helps management understand its significance and prioritize corrective actions appropriately.
Question 4: A process owner submits a management response stating 'noted' without specifying corrective actions. The CAE should:
- Accept the response to avoid conflict with the process owner
- Request a specific action plan with owner and target completion date (Correct answer)
- Issue the report with the vague response included
- Escalate to the CEO before the report is finalized
Correct answer: Request a specific action plan with owner and target completion date
Management responses should include specific corrective actions, responsible parties, and target dates; vague responses fail to demonstrate commitment to remediation.
Question 5: Which scenario BEST illustrates a breakdown in communication between internal audit and its stakeholders?
- The CAE presents preliminary findings before the final report is issued
- Management learns of a significant control gap through the external auditor before the internal audit report (Correct answer)
- The audit committee requests additional detail on a high-risk finding
- A process owner raises concerns about the scope of an upcoming engagement
Correct answer: Management learns of a significant control gap through the external auditor before the internal audit report
Management learning of significant findings from external auditors first indicates a failure in timely and proactive internal audit communication.
Question 6: According to the IIA Standards, interim communications during an engagement are PRIMARILY intended to:
- Replace the final audit report for minor engagements
- Alert management to significant issues that require immediate attention (Correct answer)
- Fulfill the annual reporting requirement to the audit committee
- Document disagreements between auditors and process owners
Correct answer: Alert management to significant issues that require immediate attention
Interim communications allow the audit team to promptly notify management of critical findings that cannot wait until the final report is issued.
Question 7: A CAE is asked by the CFO to delay reporting a fraud finding until after the quarterly earnings announcement. The APPROPRIATE response is to:
- Comply with the CFO's request to maintain a cooperative relationship
- Delay the report but document the CFO's request in working papers
- Report the fraud finding according to established escalation protocols without delay (Correct answer)
- Consult with external auditors before deciding how to proceed
Correct answer: Report the fraud finding according to established escalation protocols without delay
Requests to delay fraud reporting represent an inappropriate attempt to influence audit outcomes; auditors must follow established escalation protocols regardless of management pressure.
Certified Internal Auditor Communication & Stakeholder Relations 3
During an exit conference, management disputes a finding and provides additional evidence.
The auditor should: