The board of a newly established organization was discussing the contents of the draft internal audit charter One board member suggested adding to the charter an obligation for the internal audit activity to develop controls in business procedures. The board member explained that the new organization needs professional- level developers, internal auditors have the necessary skills and competencies, and the internal audit activity is well positioned to assume this responsibility. Which of the following would be a potential concern if the board member's suggestion is adopted?

• A. Due professional care.
• B. Internal audit objectivity.
• C. Professional development.
• D. Risk management assurance.

Which of the following statements is true regarding organizational culture and an audit of the control environment?

• A. If there are unresolved scope restrictions, the CAE should consider whether to pursue the audit and note the scope restrictions in the audit report
• B. For multinational organizations it is important to ensure that the organizational culture is consistent at all locations
• C. Because the chief audit executive (CAE) is part of the organizational culture, external auditors should be engaged to evaluate the control environment
• D. Because it will create a conflict of interest relating to the control environment, senior management should not be consulted during the audit

In which of the following audits would the internal auditors most likely contribute to the assessment of organizational governance?

• A. An assessment of performance management practices and establishment of key performance indicators
• B. An assessment of compliance of individual data protection procedures with data protection regulations
• C. An assessment of the effectiveness of back-up procedures and execution of business recovery plans
• D. An assessment of profit and loss generated by financial assets and instruments in the past quarter

Which of the following is the best reason why the engagement supervisor should take care in explaining to local management the criteria that will be used to measure the effectiveness of the control environment?

• A. The assessment will focus on the policy for a particular process.
• B. The assessment will lack a defined scope
• C. The assessment will probably uncover fraud risks.
• D. The assessment will cover soft controls and company values.

In which of the following scenarios is the internal auditor in conformance with The IIA ' s Code of Ethics and the Standards?

• A. The auditor communicates an audit opinion on fraud risk during an audit engagement's preliminary fraud risk assessment
• B. The chief audit executive declines an assurance engagement in IT because the internal audit activity is not proficient in IT
• C. Management has agreed to remedy a significant control deficiency, so the auditor excludes the deficiency from the engagement report
• D. The auditor testifies in front of a jury about an organization ' s fraudulent financial practices after receiving a subpoena