CRMA - Certification in Risk Management Assurance Planning Risk-Based Engagements Questions and Answers

Question 1

A Chief Audit Executive (CAE) has established a comprehensive, risk-based annual audit plan that has been approved by the audit committee. Three months into the year, a new, potentially disruptive technology emerges in the organization's industry. Senior management is concerned about the unforeseen risks. What is the most appropriate first step for the CAE to take?

Accepted Answer

Conduct a preliminary assessment of the risks associated with the new technology to determine its significance to the organization.

Answer

According to IIA Standard 2010, the CAE must review and adjust the audit plan as necessary in response to changes in the organization's business, risks, and operations. The most appropriate initial action is to perform a preliminary assessment to understand the nature and potential impact of the risks. This assessment will provide the basis for deciding whether to adjust the plan, which could involve reprioritizing existing audits, adding a new engagement, or another course of action. Acting without this assessment would be premature, while ignoring the risk would be negligent.

Question 2

When developing a risk-based audit plan, what is the primary purpose of creating an audit universe?

Accepted Answer

To provide a comprehensive inventory of all potential audit subjects, which serves as the foundation for the risk assessment and planning process.

Answer

The audit universe is the complete set of auditable entities (such as processes, departments, systems, and functions) within an organization. Its primary purpose is to serve as a comprehensive inventory from which to identify, assess, and prioritize risks, ultimately forming the basis of the risk-based internal audit plan. It ensures that the planning process is structured and that no significant areas are overlooked.

Question 3

A CRMA is prioritizing potential engagements from the audit universe to create the annual audit plan. Which of the following factors is the MOST crucial for ensuring the plan adds value to the organization?

Accepted Answer

The alignment of potential engagements with the organization's strategic objectives and key risks.

Answer

IIA Standard 2010 states that the CAE must establish a risk-based plan to determine the priorities of the internal audit activity, consistent with the organization's goals. To add value, internal audit's priorities must align with the organization's strategic objectives and focus on the risks that could prevent the achievement of those goals. While other factors like time since the last audit are considered, the direct link to strategy and enterprise-level risks is the most critical element.

Question 4

The CEO approaches the Chief Audit Executive (CAE) with an urgent request to conduct a special review of a new joint venture, an engagement that was not included in the approved annual audit plan. What is the CAE's most appropriate response?

Accepted Answer

Assess the request's significance and the impact on the current audit plan, including resource implications, and discuss the necessary trade-offs with senior management and the audit committee.

Answer

A risk-based audit plan must be flexible. When a significant, unplanned request arises, the CAE's responsibility is to evaluate it. This involves understanding the request's strategic importance and risks, determining the resources required, and assessing the impact of reallocating resources from planned engagements. The final decision to modify the plan should be discussed with and approved by senior management and the audit committee, ensuring transparency about what other planned work may be delayed or canceled.

Question 5

Which of the following is the most critical input for the Chief Audit Executive (CAE) to consider when developing the annual risk-based internal audit plan?

Accepted Answer

The organization's strategic objectives, business plans, and associated enterprise-level risks.

Answer

According to IIA guidance, the development of a risk-based plan begins with understanding the organization's strategies, key business objectives, associated risks, and risk management processes. This strategic alignment ensures that internal audit focuses its limited resources on the areas most critical to the organization's success and provides the most value. While resource availability and past plans are important considerations, the strategic direction and risk profile are the primary drivers.

(CRMA) Certification in Risk Management Assurance Practice Test

(CRMA) Certification in Risk Management Assurance Practice Test

CRMA - Certification in Risk Management Assurance Planning Risk-Based Engagements Questions and Answers