In addition to her internal audit activity responsibilities, the chief audit executive has been asked to oversee the organization's insurance function. Which of the following responses is most…

Question

Options

• AWelcome the additional responsibility, as it represents an opportunity to gain more information
• BRevise the internal audit charter to include oversight of the insurance function, ensuring that all of
• CReport the request to the board and recommend alternate processes to obtain assurance related
• DPromptly remove the organization's insurance function from the audit universe.

• A
  3% (1)
• B
  84% (32)
• C
  3% (1)
• D
  11% (4)

Explanation

Option B is correct because IIA Standard 1112 explicitly addresses situations where a Chief Audit Executive (CAE) takes on responsibilities outside of internal auditing: those responsibilities must be documented in the internal audit charter, and safeguards must be in place to limit impairments to independence and objectivity. Revising the charter is the proper governance mechanism to formalize the arrangement and establish those safeguards (typically by ensuring the insurance function is subject to external rather than internal audit review).

Why the distractors are wrong:

• A is wrong because welcoming responsibility for informational gain ignores the independence and objectivity requirements - enthusiasm without governance is insufficient.
• C is wrong because it implies the CAE should decline and redirect the role; while board communication is part of the process, Standard 1112 permits CAEs to hold non-audit roles when proper safeguards exist - outright deflection isn't required.
• D is wrong because silently removing the area from the audit universe skips the required governance step of updating the charter and disclosing the arrangement.

Memory tip: Remember "Charter First" - whenever a CAE's role expands beyond internal auditing, the formal response is always to revise the charter to document and govern the new responsibility, not to refuse, ignore, or quietly adjust the audit plan.

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