CRMA Internal Audit's Consulting Role 2 — Questions and Answers
Question 1: According to IIA Standards, the nature and scope of consulting services are primarily determined by:
- The Chief Audit Executive based solely on risk assessment
- Agreement between internal audit and the engagement client (Correct answer)
- The audit committee's annual charter approval
- External regulatory requirements
Correct answer: Agreement between internal audit and the engagement client
IIA Standards specify that consulting service scope is agreed upon with the engagement client, distinguishing it from assurance where scope is independently set.
Question 2: Which best distinguishes a consulting engagement from an assurance engagement?
- Consulting requires a formal audit opinion while assurance does not
- Assurance engagements are reactive while consulting engagements are proactive
- In assurance the auditor independently assesses evidence; in consulting the auditor serves the client's stated advisory needs (Correct answer)
- Consulting engagements must always be included in the annual audit plan
Correct answer: In assurance the auditor independently assesses evidence; in consulting the auditor serves the client's stated advisory needs
Assurance involves independent evidence assessment and an opinion; consulting is advisory service defined by the client's needs.
Question 3: A business unit manager asks internal audit to help design a new vendor onboarding process. This is best classified as:
- An assurance engagement
- A compliance review
- A consulting engagement (Correct answer)
- An internal investigation
Correct answer: A consulting engagement
Designing processes is an advisory activity where internal audit serves the client's needs, making it a consulting engagement.
Question 4: Training employees on internal control concepts is an example of which type of consulting activity recognized by the IIA?
- Attestation
- Facilitation
- Advisory
- Training (Correct answer)
Correct answer: Training
Training is explicitly recognized in IIA guidance as a distinct type of consulting service internal audit may provide.
Question 5: When internal auditors perform consulting activities, they are required to maintain:
- Absolute independence from all management functions at all times
- Objectivity, with disclosure of any impairments to independence (Correct answer)
- Physical separation from the consulting client during fieldwork
- A separate budget independently approved by the board
Correct answer: Objectivity, with disclosure of any impairments to independence
IIA Standards require objectivity in consulting engagements; while full independence may be impaired, auditors must disclose any such impairment.
Question 6: An internal auditor who helped design a control is later assigned to audit that same control. The auditor should:
- Proceed normally since consulting and assurance are formally separate engagement types
- Disclose the prior consulting involvement and assess whether objectivity is impaired before proceeding (Correct answer)
- Obtain written approval from the external auditor before conducting the audit
- Refuse all future audit assignments in that business unit permanently
Correct answer: Disclose the prior consulting involvement and assess whether objectivity is impaired before proceeding
Prior consulting involvement can impair objectivity on assurance work, which must be disclosed and evaluated per IIA Standards.
Question 7: In a consulting engagement, who is the primary beneficiary of the work product?
- The audit committee
- The engagement client (typically management) (Correct answer)
- The external auditors
- Shareholders and stakeholders
Correct answer: The engagement client (typically management)
In consulting engagements, the client who requested the service — typically management — is the primary beneficiary, unlike assurance where the board and stakeholders benefit.
CRMA Internal Audit's Consulting Role 2
According to IIA Standards, the nature and scope of consulting services are primarily determined by: