CIA Challenge Exam IIA-CHAL-QISA Full Course Free

Professional skepticism is an essential attitude for internal auditors, particularly when assessing the risk of fraud. According to the IIA's Practice Guide "Internal Auditing and Fraud", one of the red flags that may heighten an internal auditor’s professional skepticism is the presence of employees whose qualifications or credentials do not match the requirements of their positions. In this case, a procurement manager lacking the expected academic credentials raises concerns because it could indicate potential fraudulent activities such as unqualified decision-making or manipulation of procurement processes.

Introduction:

Review notes are comments or questions posed by engagement supervisors during the review of workpapers to ensure audit quality and completeness.

IIA Guidance on Review Notes:

According to the IIA, review notes serve as a tool for engagement supervisors to seek additional evidence or clarification.

Options Analysis:

Option A: This is correct as per IIA guidance, once concerns have been addressed, review notes can be cleared from the final documentation.

Option B: Management does not typically address review notes; these are internal audit processes.

Option C: The CAE does not need to initial or sign the review notes, as the engagement supervisor's review is sufficient.

Option D: While review notes must be addressed, they do not necessarily need to be retained after being resolved.

Conclusion:

The correct procedure allows for review notes to be cleared once the engagement supervisor’s concerns are addressed, streamlining the documentation process.

Contribution Margin: Contribution margin is the amount by which the sales price of a product exceeds its variable costs. After reaching the break-even point, each additional unit sold contributes directly to operating income.

Engagement Supervision Objectives:

Assign Responsibilities: Supervisors must clearly assign tasks and responsibilities to individual auditors to ensure clarity and accountability during the engagement.

Approve Engagement Program: The supervisor is responsible for reviewing and approving the engagement program, ensuring that it aligns with the engagement objectives and internal audit standards.

Training and Development: Supervision also involves mentoring and developing audit staff, providing guidance and feedback to enhance their skills and performance.

IIA Standards:

Standard 2340 – Engagement Supervision: Internal audit engagements must be properly supervised to ensure objectives are achieved, quality is maintained, and staff are developed.

Primary Objectives:

Clarity and Accountability: Assigning responsibilities ensures that each auditor knows their role and tasks.

Quality and Compliance: Approving the engagement program ensures that the audit plan is robust and compliant with standards.

Professional Development: Enabling training and development helps build a competent and skilled audit team.

References:

Effective engagement supervision involves assigning responsibilities, approving the engagement program, and facilitating training and development, ensuring a successful audit engagement and continuous staff improvement​​​​.