Suspecting fraud, the chief financial officer (CFO) asked the internal audit activity to investigate a significant increase in travel related expenditures. Work was performed by a qualified internal auditor. Following the completion of the engagement, the chief audit executive (CAE) reported to the CFO that no violations were found and no fraud had occurred.
According to the Standards, which of the following principles did the CAE violate?

• A. Proficiency.
• B. Due professional care.
• C. Individual objectivity.
• D. Organizational independence.

According to the International Professional Practices Framework, which of the following are allowable activities for an internal auditor?
1. Advocating the establishment of a risk management function.
2. Identifying and evaluating significant risk exposures during audit engagements.
3. Developing a risk response for the organization if there is no chief risk officer.
4. Benchmarking risk management activities with other organizations.
5. Documenting risk mitigation strategies and techniques.

• A. 1.2. 4. and 5 only.
• B. 4 and 5 only.
• C. 2. 3. 4. and 5 only.
• D. 1.2, and 3 only.

What type of risk management strategy is being employed when an organization installs two firewalls to provide protection from unauthorized access to the network?

• A. Accepting the risk that there may be attempts at unauthorized access to the network.
• B. Avoiding the risk of having a direct network connection to un-trusted networks.
• C. Diversifying the risk that network access will not be available to legitimate, authorized users.
• D. Sharing the risk that either firewall could be compromised by hackers.

A chief audit executive (CAE) learns that the brother-in-law of a senior auditor who audits the procurement process was hired as the head of the procurement department six months prior. Which of the following is the most appropriate action for the CAE to take?

• A. The CAE should require the senior auditor to disclose the relationship in writing before continuing his responsibility for monitoring procurement.
• B. The CAE should remind the senior auditor of his obligation to be objective and impartial.
• C. The CAE should not interfere because there is no evidence that a conflict of interest has occurred.
• D. The CAE should change the senior auditor's assignment and take corrective action for the auditor's failure to disclose the conflict of interest.

An internal audit activity includes in its audit reports the assertion that its work is performed in conformance with the International Standards for the Professional Practice of Internal Auditing {Standards). A recent external quality assessment concluded that the internal audit activity had substantial deficiencies that impact its overall operations. According to IIA guidance, which of the following is the most appropriate action for issuing future audit reports?

• A. Refrain from indicating that the internal audit activity operates in conformance with the Standards until the chief audit executive confirms that the internal audit activity has addressed all areas of nonconformance and the audit committee has been notified.
• B. Update and reissue previous audit reports, removing the assertion that the internal audit activity operates in conformance with the Standards, and distribute them to all parties who received the original reports.
• C. Refrain from indicating that the internal audit activity operates in conformance with the Standards until another external assessment confirms that the significant areas of nonconformance have been addressed.
• D. Indicate that the internal audit activity operates in partial conformance with the Standards, as the internal audit activity has a quality assurance and improvement program in place to address deficiencies and has met the requirement for conducting an external assessment.