CRMA Planning Risk-Based Engagements 5

Question 1

In a highly regulated industry, how should compliance risks be weighted during risk-based engagement planning?

Accepted Answer

Weighted heavily due to the severity of potential legal and financial penalties

Answer

The magnitude of regulatory penalties justifies elevated weighting of compliance risks in the risk-based planning process.

Question 2

When planning engagements for a newly formed business unit with no prior audit history, internal auditors should:

Accepted Answer

Assign higher inherent risk due to the unknown control environment and limited historical data

Answer

New units lack an established control track record, making the risk of undetected control gaps higher than in well-audited, mature areas.

Question 3

Which scenario BEST illustrates 'risk appetite' as applied in risk-based engagement planning?

Accepted Answer

Management accepts some residual risk in lower-stakes processes to direct resources toward critical ones

Answer

Risk appetite reflects the amount of risk management is willing to accept, guiding where internal audit focuses scarce engagement resources.

Question 4

During planning, an auditor finds that a formerly low-risk process now has sharply increased transaction volumes and a new system implementation. The auditor should:

Accepted Answer

Reassess the risk rating upward and consider elevating the engagement's priority in the plan

Answer

Significant changes in risk drivers—volume, systems, people—require immediate reclassification to keep the plan risk-responsive.

Question 5

Which statement BEST describes the 'top-down' approach to risk-based engagement planning?

Accepted Answer

Beginning with organizational strategic objectives and identifying risks that could prevent achieving them

Answer

A top-down approach anchors the audit plan in organizational strategy, tracing downward through processes that support strategic objectives.

(CRMA) Certification in Risk Management Assurance Practice Test

(CRMA) Certification in Risk Management Assurance Practice Test

CRMA Planning Risk-Based Engagements 5