Certified Internal Auditor Internal Audit Standards & Ethics 2 — Questions and Answers
Question 1: According to the IIA Standards, which element is NOT part of the mandatory guidance framework?
- Core Principles
- Standards
- Code of Ethics
- Practice Guides (Correct answer)
Correct answer: Practice Guides
Practice Guides are recommended guidance, not mandatory; mandatory guidance includes Core Principles, Standards, and the Code of Ethics.
Question 2: The IIA Code of Ethics principle of 'Objectivity' requires internal auditors to:
- Report all findings regardless of management preferences
- Disclose all conflicts of interest
- Avoid situations that impair or appear to impair unbiased assessment (Correct answer)
- Refuse gifts valued over $25
Correct answer: Avoid situations that impair or appear to impair unbiased assessment
Objectivity requires auditors to avoid situations that impair or appear to impair unbiased assessment, ensuring balanced judgment.
Question 3: Standard 1111 (Direct Interaction with the Board) requires the CAE to:
- Report exclusively to the board bypassing management
- Communicate and interact directly with the board (Correct answer)
- Obtain board approval for every audit plan change
- Submit all reports to the board before management
Correct answer: Communicate and interact directly with the board
Standard 1111 requires the CAE to communicate and interact directly with the board to support independence and governance.
Question 4: An internal auditor discovers a control weakness outside the current engagement's scope. Under the Standards, the auditor should:
- Ignore it since it is out of scope
- Document it and communicate it to appropriate management (Correct answer)
- Immediately expand the engagement to cover it
- Report it directly to external regulators
Correct answer: Document it and communicate it to appropriate management
Standard 2600 requires auditors to communicate observations noted outside the engagement scope to appropriate levels of management.
Question 5: Which type of assurance engagement involves the internal audit activity providing an opinion on the reliability of information provided by another party?
- Consulting engagement
- Self-assessment engagement
- Assurance engagement (Correct answer)
- Compliance engagement
Correct answer: Assurance engagement
An assurance engagement is an objective examination of evidence to provide an independent opinion or conclusion about an entity, operation, function, process, system, or other subject matter.
Question 6: Under the IIA Standards, the quality assurance and improvement program (QAIP) must include:
- Annual external assessments only
- Ongoing monitoring, periodic self-assessments, and external assessments (Correct answer)
- Quarterly board reporting on audit quality
- Benchmarking against peer audit functions only
Correct answer: Ongoing monitoring, periodic self-assessments, and external assessments
Standard 1300 requires the QAIP to include ongoing monitoring, periodic self-assessments, and periodic external assessments.
Question 7: If an internal auditor lacks the knowledge required to perform an engagement, the Standards require the CAE to:
- Decline the engagement entirely
- Obtain competent advice and assistance (Correct answer)
- Assign it to the most experienced available staff
- Notify the external auditors to perform it instead
Correct answer: Obtain competent advice and assistance
Standard 1210 requires that when the internal audit activity lacks the necessary knowledge or skills, the CAE must obtain competent advice and assistance.
Certified Internal Auditor Internal Audit Standards & Ethics 2
According to the IIA Standards, which element is NOT part of the mandatory guidance framework?