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NEW QUESTION 36
The audit committee is concerned that the small size of the internal audit activity (IAA) makes it impractical to achieve full conformance with the Standards. To address this concern, which of the following actions is most appropriate for the CAE to take?

• A. The CAE should agree with the audit committee and implement only those standards appropriate to the size of the IAA.
• B. The CAE should seek sufficient funding to increase audit resources to meet the minimum requirements of the Standards.
• C. The CAE should explain that conformance with the Standards is essential and not dependent upon the size of the IAA.
• D. The CAE should request the audit committee to review the Standards to identify specifically which are creating the greatest concern.

Answer: C

NEW QUESTION 37
An internal audit charter, approved by the board, restricts the internal audit activity to providing assurance only on the reliability of financial information and the effectiveness of internal accounting controls. Which of the following statements is true regarding the extent to which the external auditor may rely on the internal audit activity's work?

• A. The external auditor must disregard the work, as the scope of the charter may introduce bias and result in a lack of due professional care.
• B. The external auditor may use the work, as the board has approved the charter, thus taking responsibility for any deficiencies.
• C. The external auditor may make full use of the work, as the audit charter is very specific as to the work the internal audit activity may undertake.
• D. The external auditor may use the work with caution, due to the internal audit activity's scope and responsibility restrictions.

Answer: D

NEW QUESTION 38
According to the COSO enterprise risk management framework, which of the following best describes the activity that helps ensure risk responses are carried out effectively?

• A. Event identification.
• B. Objective setting.
• C. Control activities.
• D. Information and communication.

Answer: C

NEW QUESTION 39
According to IIA guidance, which of the following statements is false regarding continuing professional education for the internal audit activity (IAA)?

• A. Specialized education that meets unique organizational needs cannot qualify as IAA professional development.
• B. Continuing professional education can be obtained through IAA involvement in research projects.
• C. Employers are responsible for ensuring that the continuing professional education needs of the IAA are met.
• D. Completion of self-study courses fulfills IAA continuing professional education requirements.

Answer: C

NEW QUESTION 40
Who is responsible for setting the risk appetite?

• A. Chief risk officer.
• B. External auditors.
• C. Board of directors.
• D. Operations management.

Answer: C

NEW QUESTION 41
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