nonconformance with the Standards?

Question

Options

• AOne of the organization's senior internal auditors owns a side business, though to date, no sales
• BThe annual internal audit plan includes performance audits of main business processes, but
• CThe internal audit activity committed to carrying out an audit of documentation on investment
• DA periodic quality self-assessment of the internal audit activity identified a number of

• A
  79% (19)
• B
  4% (1)
• C
  13% (3)
• D
  4% (1)

Explanation

Option A describes a conflict of interest situation that violates IIA Standard 1120 (Individual Objectivity) and Standard 1130 (Impairment to Independence or Objectivity). An internal auditor owning a side business - even one with no sales yet - represents an undisclosed conflict of interest that impairs objectivity; the Standards require auditors to disclose such situations regardless of whether harm has yet occurred.

Options B, C, and D are all incomplete as presented, but their stems point to activities that align with the Standards: including performance audits in the annual plan (Standard 2010), committing to execute planned audits (Standard 2200), and conducting periodic quality self-assessments (Standard 1311) are all required or permitted practices, not violations.

Memory tip: Think of objectivity like a judge - a judge who owns stock in a company cannot preside over a case involving that company, even if they haven't profited yet. The potential for bias is the problem, not just actual bias. When you see an auditor with a personal financial interest tied to their work, flag it as nonconformance immediately.

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