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Question 643 - IIA-CIA-Part1 discussion

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The internal audit activity conducted an organization wide risk assessment. One of the most significant risks identified is associated with the oil price market. The chief audit executive (CAE) is considering including in the annual audit plan an assessment of the effectiveness of oil price risk management. The manager responsible commented that the assessment was not needed, as market risks were regularly addressed by the financial risk committee. If the CAE decides to include this activity in the annual audit plan anyway, how should it be recorded?

A.

A consulting engagement independent of the financial risk committee's review.

Answers
A.

A consulting engagement independent of the financial risk committee's review.

B.

A risk assessment.

Answers
B.

A risk assessment.

C.

An assurance engagement.

Answers
C.

An assurance engagement.

D.

A joint consulting engagement with input from the financial risk committee.

Answers
D.

A joint consulting engagement with input from the financial risk committee.

Suggested answer: C

Explanation:

An assurance engagement provides an independent assessment of governance, risk management, and control processes. In this case, including the effectiveness of oil price risk management in the annual audit plan as an assurance engagement would allow the internal audit activity to evaluate the controls and processes in place for managing this significant risk. Even though the financial risk committee regularly addresses market risks, an independent review by internal audit can provide additional assurance to stakeholders about the effectiveness of these risk management practices.

Reference: The IIA's International Standards for the Professional Practice of Internal Auditing (Standards), specifically Standard 2010 - Planning, and Standard 2130 - Control.

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asked 03/11/2024
MIGUEL PARADA VAZQUEZ
34 questions
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