Which of the following situations is most likely to prompt the internal audit activity to disclose its nonconformance with the Standards?
A.
One of the organization's senior internal auditors owns a side business, though to date, no sales have been made to this business.
B.
The annual internal audit plan includes performance audits of main business processes, but reviews of high-risk development projects were not considered.
C.
The internal audit activity committed to carrying out an audit of documentation on investment hedging, and a hedging expert was contracted to assist with the engagement.
D.
A periodic quality self-assessment of the internal audit activity identified a number of improvement areas with regard to key performance indicators.
According to IIA Standard 1320, the chief audit executive (CAE) must disclose instances of nonconformance with the Standards that:
Are significant enough to impact the overall scope or operation of the internal audit activity.
Affect the ability of the internal audit activity to provide reliable assurance to senior management and the board.
Failing to consider high-risk areas, such as development projects, when creating the annual audit plan is a serious oversight:
✅ It undermines the effectiveness of risk-based assurance.
✅ It indicates that the internal audit activity is not properly aligned with the organization’s risk profile.
✅ It reflects a failure to conform with Standards related to risk-based planning (Standard 2010) and proper coverage of significant risks.
Such a situation could warrant formal disclosure of nonconformance, especially to the board or audit committee.
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Kozy
3 weeks, 6 days ago