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Part 6 Questions with Explanations of Answers | latest upate 2024
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Part 6 Questions with Explanations of Answers | latest upate 2024
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Part 6An internal auditor is performing services in a division in which the chief financial officer
is a close personal friend, and the internal auditor learns that the friend is to be replaced
after a series of critical labor negotiations. The internal auditor relays this information to
the friend. Has a violation of The IIA's Code of Ethics occurred?
A. No. The internal auditor was just being honest with his or her friend.
B. No. The use of the confidential information resulted in no personal gain to the internal
auditor.
C. Yes. The internal auditor was not prudent in the use of information acquired in the
course of his or her duties.
D. Yes. The internal auditor had a conflict of interest with the organization. - ANS-C.
Yes. The internal auditor was not prudent in the use of information acquired in the
course of his or her duties.
The confidentiality principle in The IIA's Code of Ethics is violated by
A. Failing to establish an active quality assurance program.
B. Collecting data for internal use beyond that needed for the engagement.
C. Participating in an activity that conflicts with the organization's interests.
D. Maintaining documentation of skills self-assessments. - ANS-B. Collecting data for
internal use beyond that needed for the engagement.
Which situation most likely violates The IIA's Code of Ethics and the Standards?
A. Because the internal audit activity lacks skill and knowledge in a specialty area, the
chief audit executive (CAE) has hired an expert. The engagement manager has been
asked to review the expert's approach to the assignment. Although knowledgeable
about the area under review, the manager is hesitant to accept the assignment because
of lack of expertise.
B. An organization's charter for the internal audit activity requires the chief audit
executive (CAE) to present the yearly engagement work schedule to the board for its
approval and suggestions.
C. The engagement manager has removed the most significant observations and
recommendations from the final engagement communication. The in-charge internal
auditor opposed the removal, explaining that (s)he knows the reported conditions exist.
The in-charge internal auditor agrees that, techni - ANS-D. The chief audit executive
(CAE) disagrees with the engagement client about the observations and
recommendations in a sensitive area. The CAE discusses the detail of the observations
and the proposed recommendations with a fellow CAE from another organization.
, A chief audit executive (CAE) learned that a staff internal auditor provided confidential
information to a relative. Both the CAE and staff internal auditor are CIAs. Although the
internal auditor did not benefit from the transaction, the relative used the information to
make a significant profit. The most appropriate way for the CAE to deal with this
problem is to
A. Summarily discharge the internal auditor and notify The IIA.
B. Verbally reprimand the internal auditor.
C. Inform The IIA's Board of Directors and take the personnel action required by
organizational policy.
D. Take no action because the internal auditor did not benefit from the transaction. -
ANS-C. Inform The IIA's Board of Directors and take the personnel action required by
organizational policy.
Internal auditors specifically demonstrate conformance with the confidentiality principle
by
A. Obtaining new certifications and continuing professional education.
B. Performing internal audit reviews in accordance with the Standards.
C. Disclosing all material facts to avoid distortion of reporting.
D. Documenting distribution restrictions on engagement records. - ANS-D. Documenting
distribution restrictions on engagement records.
Which of the following violates The IIA's Code of Ethics principle of confidentiality?
A. The company's internal audit charter states, "If independence is impaired in fact or
appearance, the details of the impairment must be disclosed to appropriate parties."
B. The CAE began an investigation on submitted travel expense reports after hearing
sales personnel were inflating their travel expenses.
C. The internal auditor purchased stock in the company after seeing a draft of the
quarterly financial statements.
D. A first-year internal auditor sought help preparing workpapers from a third-year
internal auditor on the same engagement. - ANS-C. The internal auditor purchased
stock in the company after seeing a draft of the quarterly financial statements.
To comply with the confidentiality principle in The IIA's Code of Ethics, internal auditors
should
A. Omit observations from engagement reports.
B. Solicit feedback from internal audit stakeholders.
C. Not permit other auditors to issue false reports.
D. Use data encryption and restrict email distribution. - ANS-D. Use data encryption and
restrict email distribution.
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