IIA IIA-CIA-Part2 Exam With Confidence Using Practice Dumps

When planning an assurance engagement, especially for a foreign subsidiary, it is essential to communicate effectively with management to ensure transparency and set expectations. According to IIA guidance, the preliminary communication should include critical information that helps the management of the area under review understand the purpose, scope, and logistics of the audit.

IIA Standard 2201 – Planning Considerations:

This standard emphasizes that the internal auditor should plan the engagement to achieve the engagement objectives effectively. It includes discussing the scope, objectives, timing, and resource allocations with management.

Key Elements to Include in Preliminary Communication:

Scope of the Engagement: Clearly defining what the audit will cover ensures that both the auditors and the management understand the boundaries and focus areas of the audit.

Estimated Time Frame: Providing a timeline helps management plan their activities and ensures that the audit process does not interfere with critical operations.

Names of the Auditors: Identifying the audit team helps in establishing a working relationship and allows management to know who will be conducting the audit.

IIA Practice Advisory 2201-1:

This advisory suggests that early communication of the scope, timing, and staffing helps in gaining the management’s cooperation and sets the stage for a successful audit.

Option B and D (Including resources and travel budget): These details are more administrative and do not need to be included in the preliminary communication to management.

Option C (Resources, budget, and scope): While scope is important, resources and budget are internal matters and not essential in preliminary communication with management.

Detailed Explanation:Why Not Other Options?Conclusion: Option A is correct as it ensures that the management is informed about the key aspects of the audit that directly impact them, aligning with IIA’s standards for audit planning and communication.

When dealing with the communication of audit results to external parties, the internal auditor must adhere to IIA standards regarding confidentiality, approval processes, and the appropriate handling of sensitive information.

IIA Standard 2440 – Disseminating Results:

This standard outlines that the chief audit executive (CAE) must approve the communication of engagement results to parties outside the organization. The CAE is responsible for ensuring that the distribution of audit findings is appropriate and does not compromise confidentiality or integrity.

Confidentiality and Authorization:

The internal auditor must protect the confidentiality of the information obtained during the audit. Sharing this information with external parties, such as an advertising agency, should only occur with proper authorization, typically from the CAE.

IIA Code of Ethics – Confidentiality:

The Code of Ethics requires auditors to respect the value and ownership of information they receive and to not disclose information without appropriate authority. In this case, if the audit client requests the report to be shared with an external party, the internal auditor must first obtain approval from the CAE to ensure this disclosure is appropriate.

Option B (May not communicate results): While confidentiality is crucial, the CAE can authorize the sharing of information with external parties if it is deemed appropriate.

Option C (Include instructions for limited distribution): While limiting further distribution is a good practice, the initial sharing still requires the CAE’s approval.

Option D (Verbal communication only): This restricts the auditor unnecessarily. The key is obtaining proper authorization, not limiting the form of communication.

Detailed Explanation:Why Not Other Options?Conclusion: Option A is correct as it ensures that the results can be communicated to the external party with the appropriate approval from the CAE, in line with IIA standards on dissemination and confidentiality.

The IIA Standards require the CAE to communicate risk acceptance that may be unacceptable to senior management and the board. The first step is to discuss the issue with senior management to understand their perspective and potentially resolve the concern. If senior management does not take appropriate action, the CAE must then inform the board to ensure they are aware of the risk and can take necessary action.References:

The Institute of Internal Auditors (IIA), International Standards for the Professional Practice of Internal Auditing (Standards)

"Internal Auditing: Assurance and Advisory Services" by Urton L. Anderson et al.