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A multinational organization has asked the internal audit activity to assist in setting up the organization's risk management system. The chief audit executive (CAE) agrees to take on the engagement as a consultant.
Which of the following tasks is appropriate for the CAE to undertake?

• A. Determine the number of significant risks for management to report to the board.
• B. Set risk indicators and mitigation plans for management to implement.
• C. Coordinate and facilitate risk workshops for management to attend.
• D. Establish the degree of risk appetite for management to accept.

Why is it important for the chief audit executive to periodically review the audit charter and present the results to senior management and the board?

• A. So that the individual objectivity of the internal audit staff can be more clearly established.
• B. Because management requires the review to measure effectiveness of the internal audit activity.
• C. Because changes in the organization may impair the internal audit activity's ability to meet its objectives.
• D. So that there is assurance of the internal audit staff's proficiency to complete audit activities.

Which of the following is true regarding the use of a formal risk management framework?
1. It facilitates a methodical approach to risk mitigation.
2. It defines and standardizes the terminology used in risk communication.
3. It establishes the risk tolerance levels to be accommodated in the strategy.
4. It facilitates the alignment of risk mitigation strategies with management priorities.

• A. 1,2, and 4.
• B. 1.3, and 4.
• C. 2. 3, and 4.
• D. 1.2, and 3.

An organization is facing a financial downturn and needs to impose major budget reductions to all departments. According to MA guidance, which of the following actions is most appropriate for the board to take to evaluate the potential impact on the internal audit activity?

• A. Ask The human resources department to determine how the annual compensation and salary of the audit staff could be adjusted to achieve savings.
• B. Ask management to determine which internal audit engagements are lower risk and could be considered for removal from the annual audit plan.
• C. Ask the chief audit executive to determine whether budgetary limitations impede the ability of the internal audit activity to execute its responsibilities.
• D. Ask appropriate stakeholders for their opinion on the potential impacts of reducing the scope of the internal audit plan.

Which of the following decisions made during the testing phase of a compliance audit requires the most judgment by an internal auditor?

• A. Which fields to examine on each invoice.
• B. Whether an individual expenditure is allowable.
• C. What level of noncompliance is acceptable.
• D. Which sampling methodology to select for testing.