Which of the following offers the best evidence that the internal audit activity has achieved organizational independence?

• A.An independent third party has assessed the organization's system of internal controls to be adequate and effective.
• B.The mission statement and strategy of the internal audit activity demonstrates alignment to organizational objectives.
• C.The chief audit executive reports both functionally and administratively to the CEO.
• D.The internal audit charter is drafted properly and approved by the appropriate parties.

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A chief audit executive (CAE) of an international charity reports functionally to the audit committee of the board of directors and administratively to the charity's chief financial officer (CFO).
Which of the following would impair the internal audit function's independence?

• A.The CFO manages the accounting of the budget for the internal audit function.
• B.The CFO determines the scope of internal audit work in the accounting department.
• C.The CFO provides feedback on the CAE's audit reports.
• D.The CFO administers the annual evaluation process for the internal auditors.

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Faced with a complex, highly technical construction audit engagement, the chief audit executive (CAE) considered complementing the current internal audit resources by engaging the services of a civil engineer.
Which of the following should the CAE consider in determining whether the engineer possesses the necessary skills to perform the engagement?
1. Professional certification, license, or other recognition of the engineer's competence in the relevant discipline.
2. Experience of the engineer in the type of work being considered.
3. Compensation or other incentives that the engineer may receive.
4. The extent of other ongoing services that the engineer may be performing for the organization.

• A.2 and 3 only
• B.1, 2, and 4 only
• C.3 and 4 only
• D.1 and 4 only

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According to IIA guidance, which of the following statements describes one of the similarities between assurance and consulting services?

• A.Internal auditors determine the engagement objectives, scope, and work program for both assurance and consulting services.
• B.When planning assurance and consulting engagements, internal auditors must consider the strategies and objectives of the activity being reviewed.
• C.Internal auditors must not provide assurance or consulting services for an activity for which they had responsibility within the previous year.
• D.Both assurance and consulting services generally involve the internal auditor, the area under review, senior management, and the board.

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A furniture manufacturer has installed a new fire sprinkler system at its central warehouse and canceled the existing fire insurance policy on that property. What change of risk response strategy does this course of action most likely reflect?

• A.From acceptance to avoidance.
• B.From acceptance to reduction.
• C.From sharing to reduction.
• D.From sharing to avoidance.

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