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NEW QUESTION 38 Who is responsible for setting the risk appetite?

• A. Board of directors.
• B. Chief risk officer.
• C. External auditors.
• D. Operations management.

Answer: A   NEW QUESTION 39 An internal auditor who is carrying out an engagement to review controls related to corporate tax reporting must possess which of the following competencies? 1. Proficiency in analyzing key IT risks and controls. 2. The ability to recognize significant deviations from good business practices. 3. Knowledge of key indicators of fraud in tax reporting. 4. The ability to recognize the existence of problems related to tax accounting.

• A. 1,2, 3, and 4.
• B. 3 and 4 only.
• C. 2, 3, and 4 only.
• D. 1 and 4 only.

Answer: B   NEW QUESTION 40 An internal audit activity includes in its audit reports the assertion that its work is performed in conformance with the International Standards for the Professional Practice of Internal Auditing {Standards). A recent external quality assessment concluded that the internal audit activity had substantial deficiencies that impact its overall operations. According to IIA guidance, which of the following is the most appropriate action for issuing future audit reports?

• A. Update and reissue previous audit reports, removing the assertion that the internal audit activity operates in conformance with the Standards, and distribute them to all parties who received the original reports.
• B. Refrain from indicating that the internal audit activity operates in conformance with the Standards until the chief audit executive confirms that the internal audit activity has addressed all areas of nonconformance and the audit committee has been notified.
• C. Indicate that the internal audit activity operates in partial conformance with the Standards, as the internal audit activity has a quality assurance and improvement program in place to address deficiencies and has met the requirement for conducting an external assessment.
• D. Refrain from indicating that the internal audit activity operates in conformance with the Standards until another external assessment confirms that the significant areas of nonconformance have been addressed.

Answer: D   NEW QUESTION 41 Which of the following would provide the best guidance to a chief audit executive who is setting internal audit staff requirements?

• A. The results of the audit staff's most recent performance reviews.
• B. A review of audit staff education and training records.
• C. Results from discussions of audit needs with executive management and the audit committee.
• D. Information about the audit staff size and composition of comparable organizations.

Answer: C   NEW QUESTION 42 An internal audit activity (IAA) provided assurance services for an activity it was responsible for during the preceding year. As a result, which IIA Code of Ethics principle is presumed to be impaired?

• A. Flexibility.
• B. Objectivity.
• C. Competence.
• D. Independence.

Answer: B   NEW QUESTION 43 ......