accordance with theStandards. Attr. Std. 1200 requires engagements to be performed with proficiencyand due professional care. They also should be properly supervised to ensure that objectives areachieved, quality is assured, and staff is developed [Perf. Std. 2340].7-An organization has recently placed a former operating manager in the position of chiefaudit executive [CAE]. The new CAE is not a member of The IIA and is not a CIA. Henceforth,the internal audit activity will be run strictly by the CAE’s standards, not The IIA’s. All four staffinternal auditors are members of The IIA, but they are not CIAs. According to The IIA’s Code ofEthics, what is the best course of action for the staff internal auditors?A.They should comply with theInternational Standards for the Professional Practice of InternalAuditing.B.They must respect the legitimate and ethical objectives of the organization and ignoretheStandards.C.The Code does not apply because they are not CIAs.D.They must resign their jobs to avoid improper activities.Answer [A] iscorrect.Rule of Conduct 4.2 under the competency principle states, “Internal auditors shall performinternal auditservices in accordance with theInternational Standards for the Professional Practice of Internal Auditing.”Because the internal auditors are members of The Institute, The IIA’s Code of Ethics is enforceableagainst them even though they are not CIAs.Answer [B] isincorrect.Internal auditors should respect and contribute to the legitimate and ethical objectives of the organization,but an IIA member, a holder of an IIA professional certification, or a candidate for certification may beliable for disciplinary action for failure to adhere to theStandards.Answer [C] isincorrect.The IIA’s Code of Ethics may be enforced against IIA members and recipients of, or candidates for, IIAprofessional certifications.Answer [D] isincorrect.The IIA’s Code of Ethics says nothing about resignation to avoid improper activities.8-Which of the following most likely constitutes a violation of The IIA’s Code of Ethics?A.Auditor D discovered an internal financial fraud during the year. The books were adjusted toproperly reflect the loss associated with the fraud. Auditor D discussed the fraud with the externalauditor when the external auditor reviewed working papers detailing the incident.B.Auditor A has accepted an assignment to perform an engagement at the electronicsmanufacturing division. Auditor A has recently joined the internal audit activity. But Auditor A wassenior auditor for the external audit of that division and has audited many electronicsorganizations during the past 2 years.
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Which of the following mostlikely constitutes a violation ofD. Violation of Rules of Conduct 3.2CIA Part 1 Multiple ChoiceStudy
The IIA's Code of Ethics by aninternal auditor?A. Discussing at a tradeconvention the organization'scontrols over its computernetworks.B. Deleting sensitiveinformation from a finalengagement communication atthe request of seniormanagement.C. Investigating executiveexpense reports basedcompletely on rumors ofpadding.D. Purchasing stock in a targetorganization after overhearingan executive discussion ofpossible acquisition.
A charter is one of the moreimportant factors positivelyaffecting the internal auditactivity's independence. Whichof the following is least likely tobe part of the charter?CIA Part 1 Multiple ChoiceStudy
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The purposes of the Standardsinclude all of the followingexcept
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Which Standards expand uponthe other categories ofStandards?
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The purpose of the internalaudit activity can be bestdescribed asA. Adding value to theorganization.B. Providing additionalassurance regarding firpresentation of financialstatements.C. Expressing an opinion onthe adequate design andfunctioning of the system ofinternal control.D. Assuring the absence of anyfraud that would materiallyaffect the financial statementsA.
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