According to IIA guidance, which of the following is an appropriate role for the internal audit activity?
Answer : A
The IIA's guidelines suggest that internal audit may provide support by coaching management on risk responses, but it should not take on management's responsibilities, such as implementing risk responses or setting the risk appetite, as this would impair objectivity.
According to IIA guidance, which of the following would be the most appropriate to help a new internal auditor understand the nature and positioning of the internal audit activity within his organization?
Answer : A
The internal audit charter provides a formal definition of the internal audit activity's purpose, authority, and responsibility. It is foundational for helping new auditors understand their role and how internal audit functions within the organization.
According to IIA guidance, which of the following statements regarding ethics is true?
Answer : A
Business ethics can vary within organizations that operate across multiple regions, as they must often consider local cultural norms and regulations. The IIA recognizes the need for flexibility in ethical policies for multinational organizations, while still adhering to fundamental ethical principles.
Which of the following best describes a consulting engagement rather than an assurance engagement?
Answer : B
Consulting engagements often involve providing advice or opinions at management's request. In this case, providing input on the accounting pronouncements falls under a consulting capacity, consistent with IIA definitions of consulting services.
For a high-risk observation, which is the best approach to follow when management takes an aggressive, uncompromising position in opposition to the internal audit activity?
Answer : C
Escalating unresolved high-risk issues to senior management and the board is in line with IIA guidance, which underscores the importance of ensuring that significant audit findings are addressed appropriately to protect the organization's interests.
A sales manager was recently bypassed for a promotion. He feels entitled to a higher salary and is angry that management does not recognize his contributions. To make up for this perceived injustice, he begins to record false expenses on his travel expense reports. This scenario best illustrates which of the following fraud risk factors?
Answer : B
Rationalization is evident here, as the manager justifies his fraudulent actions by viewing them as compensation for perceived unfair treatment. According to IIA guidance on fraud, rationalization allows individuals to reconcile unethical behavior with their self-concept.
Which level of corporate social responsibility does whistleblowing in companies primarily support?
Answer : A
Whistleblowing is aligned with ethical responsibility, encouraging transparency and ethical behavior within organizations. IIA guidance on corporate social responsibility emphasizes that ethical responsibility involves safeguarding stakeholders' interests.