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IIA Practice of Internal Auditing Sample Questions (Q476-Q481):
NEW QUESTION # 476
According to the International Professional Practices Framework, the internal audit activity's decision to defer follow-up of recommendations and management's corrective actions until the next scheduled engagement for the area is justified when:
- A. The reported findings or recommendations are significant enough to require immediate action by management.
- B. The action taken by management to address the recommendation is sufficient when weighed against the importance of the finding.
- C. Management has adequately understood and appropriately accepted the risk of not taking action to implement the recommendation.
- D. The significance of the finding or recommendation will allow auditors to perform monitoring by receiving periodic updates from management on corrective actions taken.
Answer: B
NEW QUESTION # 477
An internal auditor is planning to audit the organization's payroll function, which was recently outsourced. Which of the following is the most appropriate first step for the auditor?
- A. Review management's organ nationwide risk assessment
- B. Revise the scope of the audit engagement
- C. Form objectives for the audit engagement
- D. Understand the objectives and strategies of the new arrangement
Answer: D
Explanation:
When planning to audit an outsourced function, the most appropriate first step for an internal auditor is to understand the objectives and strategies of the new arrangement. This step is crucial because it sets the foundation for the entire audit process. By understanding the objectives and strategies, the auditor gains insights into the rationale behind the outsourcing decision, the expected outcomes, and how these align with the organization's overall goals. This understanding helps in identifying key risks, establishing relevant audit criteria, and tailoring the audit scope and procedures accordingly. Without this initial step, the auditor may miss critical aspects of the outsourced arrangement, leading to an incomplete or ineffective audit.
Reference:
Institute of Internal Auditors (IIA) Practice Guide: "Auditing Outsourced Activities" COSO Enterprise Risk Management Framework
NEW QUESTION # 478
An audit client responded to recommendations from a recent consulting engagement. The client indicated that several recommended process improvements would not be implemented. Which of the following actions should the internal audit activity take in response?
- A. Initiate an assurance engagement on the unresolved issues.
- B. Escalate the unresolved issues to the board, because they could pose significant risk exposures to the organization.
- C. Confirm the decision with management and document this decision in the audit file.
- D. Document the issue in the audit file and follow up until the issues are resolved.
Answer: C
Explanation:
When a client decides not to implement recommended process improvements from a consulting engagement, the internal audit activity should confirm the decision with management and document it in the audit file. This approach ensures that the audit trail is complete and that there is a record of management's acceptance of the associated risks. Escalating the issue to the board (Option A) or initiating an assurance engagement (Option D) might be necessary if the risks are significant, but these actions are not the immediate next steps. Continuous follow-up (Option C) is more relevant to assurance engagements rather than consulting engagements.
Reference:
IIA Standard 2500: Monitoring Progress.
IIA Practice Guide on Consulting Engagements.
NEW QUESTION # 479
Which of the following is the primary reason for internal auditors to conduct interim communications with management of the area under review?
- A. To provide timely discussion of results
- B. To demonstrate good project oversight
- C. To follow up on previously requested information
- D. To demonstrate internal auditor proficiency
Answer: C
NEW QUESTION # 480
If an organization's chief audit executive wants to implement continuous auditing, what is the appropriate order in which key steps should be undertaken?
I. Identify business applications that require access.
II. Implement steps to continuously assess risks and controls.
III. Define objectives of continuous auditing.
IV.
Manage and report results.
- A. II, I, III, IV.
- B. III, I, II, IV.
- C. III, I, IV, II.
- D. II, III, I, IV.
Answer: B
NEW QUESTION # 481
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