Exam IIA-CIA-Part1 topic 6 question 332 discussion

Actual exam question from IIA's IIA-CIA-Part1

Question #: 332
Topic #: 6

The internal audit activity conducted an organizationwide 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.
B. A risk assessment.
C. An assurance engagement.
D. A joint consulting engagement with input from the financial risk committee.

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Suggested Answer: B 🗳️

by f30b972 at Aug. 16, 2024, 7:09 p.m.

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Kozy

3 weeks, 6 days ago

Selected Answer: C

The CAE is considering assessing the effectiveness of oil price risk management, which falls squarely under an assurance engagement, as defined by the IIA Standards. Assurance engagements provide: Independent evaluation of governance, risk management, and control processes. Objective assessment to determine whether significant risks (like oil price market exposure) are being managed effectively. Even if the financial risk committee already monitors market risks, internal audit can still independently assess those processes. The key point: When internal audit evaluates risk management or control processes — especially for significant, organizationwide risks — it's considered an assurance activity, not consulting.

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f30b972

11 months, 3 weeks ago

Why not C?

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