Which of the following actions by the internal audit activity requires disclosure to the board of nonconformance with the Standards?

Question

Options

• AThe internal audit activity did not complete an external assessment within the last seven years
• BThe internal audit activity performed an engagement with limited scope due to lack of knowledge
• CThe internal audit activity failed to consider risk when conducting a review of a department
• DAn internal auditor was assigned to an engagement m an area where she previously worked more

• A
  77% (23)
• B
  3% (1)
• C
  7% (2)
• D
  13% (4)

Explanation

Option A is correct because the IIA Standards (Standard 1312) require the internal audit activity to undergo an external quality assessment at least every five years. Going seven years without one is a clear, measurable violation of a mandatory Standard - exactly the type of nonconformance that Standard 1322 requires be disclosed to senior management and the board, since it affects the overall operation of the internal audit activity.

Option B is incorrect because limited scope due to lack of knowledge is an engagement-level impairment that should be disclosed to the engagement client, not elevated as a Standards nonconformance to the board. Option C is incorrect because failing to consider risk in a single review is a quality deficiency in one engagement, not a structural failure to comply with the Standards at the activity level. Option D is incorrect because auditing in a previously worked area is an independence concern manageable through disclosure and safeguards at the engagement level - it doesn't automatically constitute board-level nonconformance.

Memory tip: Think "external = board-level." External quality assessments are the only item with a hard, calendar-based deadline in the Standards - missing that clock means the board must know. Everything else (scope limits, missed risk steps, prior employment) is handled closer to the engagement level.

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