Senior management asks the chief audit executive to review the organization's compliance with recently introduced legislation on international transfer pricing. The review requires an internal…

Question

Options

• AOutsource the engagement to an external audit firm that has appropriate skills.
• BRecruit a lawyer with knowledge of the legislation to the audit team and ask the new auditor to
• CDecline to perform the engagement, as the internal audit activity does not have the appropriate
• DCarry out the engagement using existing internal audit staff to help them gain the appropriate

• A
  84% (21)
• B
  8% (2)
• C
  4% (1)
• D
  4% (1)

Explanation

Outsourcing to a qualified external firm directly addresses the competency gap without delay or risk to audit quality. IIA Standard 1210 requires that internal auditors possess - or obtain - the knowledge and skills needed to perform their responsibilities. When those skills don't exist in-house, obtaining competent assistance from outside is explicitly permitted and appropriate.

Why the distractors are wrong:

• B is impractical for an immediate engagement - recruiting and onboarding a specialist takes time, and a brand-new hire would lack organizational context needed to conduct the review effectively.
• C is too extreme; declining is only warranted when no viable path to competency exists. Outsourcing is a clear alternative, making a flat refusal unnecessary and unacceptable.
• D risks producing an inadequate, unreliable audit - using inexperienced staff on a technically complex legal matter exposes the organization to non-compliance risk and undermines audit credibility.

Memory tip: Remember the IIA's "borrow before you decline" principle - when skills are missing, acquire them (externally if needed) rather than refusing or improvising. If you can't staff it internally, outsource it; only decline when no competent resource exists at all.

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