Engagement Planning

1. Should internal audit focus on the risks relevant to the activity under review?

• A.Yes. Risks relevant to the activity are on topic, and knowing about them helps avoid scope creep.✓ Correct
• B.Yes. However, internal audit should also focus on all organizational risks for every audit.
• C.Yes. Risks relevant to the activity should also include risks from other related processes.
• D.Yes. Risks relevant to the activity under review also include all risks to the organization.

2. Which of the following statements regarding evaluating the impact and likelihood of risks is true?

• A.When estimating likelihood, it is necessary to obtain a high degree of precision.
• B.When determining risk impact, it is necessary to obtain a high degree of precision.
• C.When evaluating likelihood, it important to focus on residual risk.
• D.Financial impact is the most common and easily measured impact.✓ Correct

3. Consulting engagement on the treasury process omitted key controls consistent with objectives. What should internal auditors do?

• A.Amend the scope of the engagement if management agrees to the changes.
• B.Amend the scope of the consulting engagement. The scope must address controls consistent with the engagement's objectives.✓ Correct
• C.Proceed as planned; covering all key controls is not required in consulting engagements.
• D.Proceed as planned, since management excluded these controls from the agreed scope.

4. When is the most appropriate time to evaluate fraud scenarios in the area under review?

• A.When evaluating evidence gathered during the engagement.
• B.When developing the engagement objectives.
• C.Before beginning the formal risk assessment process in an engagement.✓ Correct
• D.During the formal risk assessment process.

5. The engagement work program must be approved by whom?

• A.Management of the area under review.
• B.Executive management.
• C.Internal audit management.✓ Correct
• D.The audit committee.