CRMA - Certification in Risk Management Assurance Internal Audit's Consulting Role Questions and Answers

Question 1

Management has requested that the internal audit activity design the internal control procedures for a new payroll system and then lead the implementation project. Which of the following is the most significant risk the Chief Audit Executive (CAE) must consider before accepting this dual role?

Accepted Answer

Accepting management's responsibility for implementation will impair internal audit's objectivity for future assurance reviews of the system.

Answer

According to IIA Standards, internal auditors should not assume management responsibility. Designing and implementing controls are management functions. Performing these tasks would impair internal audit's objectivity when later called upon to provide independent assurance on the effectiveness of those same controls. While resource constraints (A, D) and charter scope (B) are valid concerns, the impairment of objectivity is the most fundamental risk that violates core internal audit principles.

Question 2

According to The IIA's International Professional Practices Framework (IPPF), what is the primary objective of an internal audit consulting engagement?

Accepted Answer

To add value and improve an organization's governance, risk management, and control processes.

Answer

The IIA's official definition states that consulting services are "advisory and related client service activities, the nature and scope of which are agreed with the client, are intended to add value and improve an organization’s governance, risk management, and control processes without the internal auditor assuming management responsibility." Providing an objective opinion (A) is the primary goal of an assurance engagement.

Question 3

Six months ago, an internal auditor provided consulting services by advising on the development of a new travel and expense reimbursement process. The Chief Audit Executive (CAE) now needs to schedule an assurance review of this new process. According to IIA Standard 1130.A1, what is the presumed status of the auditor's objectivity?

Accepted Answer

Objectivity is presumed to be impaired.

Answer

IIA Standard 1130.A1 states, "Objectivity is presumed to be impaired if an internal auditor provides assurance services for an activity for which the internal auditor had responsibility within the previous year." Providing advice on development falls under this purview, and a six-month timeframe is within the one-year period where impairment is presumed.

Question 4

Which of the following activities is the most appropriate example of an internal audit consulting engagement?

Accepted Answer

Facilitating a management workshop to identify risks associated with a new product launch.

Answer

Facilitating a risk identification workshop is a classic consulting activity. It improves the organization's risk management processes through advice and facilitation without internal audit taking ownership of the risks or the process itself. Performing reconciliations (B) and approving orders (D) are operational tasks and management responsibilities. Issuing a formal opinion (C) is the objective of an assurance engagement.

Question 5

Which statement best describes a key distinction between internal audit's assurance and consulting services?

Accepted Answer

Assurance engagements typically involve three parties, whereas consulting engagements generally involve two.

Answer

Assurance services involve three parties: the process owner (auditee), the internal auditor, and the user of the assessment (e.g., management, the board). Consulting services are generally a two-party arrangement between the internal auditor and the engagement client who requested the advice. Objectivity is required for both types of services, and both should have a documented understanding of the scope and objectives.

(CRMA) Certification in Risk Management Assurance Practice Test

(CRMA) Certification in Risk Management Assurance Practice Test

CRMA - Certification in Risk Management Assurance Internal Audit's Consulting Role Questions and Answers