Internal Audit Competency Map

Use of outside service providers with expertise in health care benefits is appropriate when the internal audit activity is

• Evaluating the organization’s estimate of its liability for postretirement benefits, which include health care

  benefits

• Comparing the cost of the organization’s health care program with other programs offered in the industry

• Training its staff to conduct an audit of health care costs in a major division of the organization

• All of the answers are correct

A chief audit executive for a large manufacturer is considering revising the internal audit activity’s charter with respect to the minimum educational and experience qualifications required. The CAE wants to require all staff auditors to possess specialized training in accounting and a professional auditing certification such as the Certified Internal Auditor or theChartered Accountant (CA). One of the disadvantages of imposing this requirement would be

• The policy might negatively affect the internal audit activity’s ability to perform quality engagements relating to the organization’s financial and accounting systems

• The policy would not promote the professionalism of the internal audit activity

• The policy would prevent the internal audit activity from using outside service providers when it did not have the knowledge, skills, and other competencies required in certain engagements

• The policy could limit the range of services that could be performed due to the internal audit activity’s narrow

  expertise and backgrounds

Reasonable assurance should be obtained as to each prospective internal auditor’s qualifications and proficiency. Which of the following is the least useful application of this principle?

• Determining that all applicants have an accounting degree

• Obtaining college transcripts

• Checking an applicant’s references

• Determining previous job experience

Your organization has selected you to develop an internal audit activity (IAA). Your approach will most likely be to hire

• Internal auditors each of whom possesses all the skills required to handle all engagements

• Inexperienced personnel and train them the way the organization wants them trained

• Degreed accountants because most internal audit work is accounting related

• Internal auditors who collectively have the knowledge and skills needed to perform the responsibilities of the

  internal audit activity

Internal auditing is unique in that its scope often encompasses all areas of an organization. Thus, it is not possible for each internal auditor to possess detailed competence in all areas that might be the subject of engagements. Which of thefollowing competencies should every internal auditor have?

• Understanding of taxation and law as it applies to operation of the organization

• Proficiency in accounting principles

• Understanding of management principles

• Proficiency in information technology

A chief audit executive (CAE) has been requested by the audit committee to conduct an engagement at a chemical factory as soon as possible. The engagement will include reviews of health, safety, and environmental (HSE) management and processes. The CAE knows that the internal audit activity does not possess the HSE knowledge necessary to conduct such an engagement. The CAE should:

• Begin the engagement and incorporate HSE training into next year’s planning to prepare for a follow-up engagement

• Suggest to the audit committee that the factory’s own HSE staff conduct the engagement

• Seek permission from the audit committee to obtain appropriate support from an HSE professional

• Defer the engagement and tell the audit committee that it will take several months to train internal audit staff for such an engagement

A chief audit executive (CAE) for a very small internal audit department has just received a request from management to perform an audit of an extremely complex area in which the CAE and the department have no expertise. The nature of the audit engagement is within the scope of internal audit activities. Management has expressed a desire to have the engagement conducted in the very near future because of the high level of risk involved. Which of the following responses by the CAE would be in violation of the Standards?

• Discuss with management the possibility of outsourcing the audit of this complex area

• Add an outside consultant to the audit staff to assist in the performance of the audit engagement

• Accept the audit engagement and begin immediately, since it is a high-risk area

• Discuss the timeline of the audit engagement with management to determine if sufficient time exists in which to develop appropriate expertise

When the engagement was assigned, management asked the internal auditor to evaluate the appropriateness of using selfinsurance to minimize risk to the organization. Given the scope of the engagement requested by management, should the internal auditor engage an actuarial consultant to assist in the engagement if these skills do not exist on staff?

• No. The internal audit activity is skilled in assessing controls, and the insurance control concepts are not distinctly

  different from other control concepts

• No. It is a normal internal auditor function to assess risk; this engagement is therefore not unique

• Yes. An actuary is essential to determine whether the health care costs are reasonable

• Yes. The actuary has skills, not usually found among internal auditors, to identify and quantify self-insurance risks

Internal auditors should possess the knowledge, skills, and other competencies essential to the performance of their individual responsibilities. Consequently, all internal auditors should be proficient in applying

• Internal auditing standards

• Quantitative methods

• Management principles

• Structured systems analysis

The internal audit activity is considering hiring a person who has a thorough understanding of internal auditing techniques, accounting, and principles of management but has nonspecialized knowledge of economics and information technology. Hiring the person is most appropriate if

• A professional development program is agreed to in advance of actual hiring

• A mentor is assigned to ensure completion of an individually designed professional development program.

• Other internal auditors possess sufficient knowledge of economics and information technology

• The prospective employee could reasonably be expected to gain sufficient knowledge of these competencies in the long run