Learn the proper steps for communicating and getting approval for the internal audit plan from the board and senior management according to IIA standards and CIA exam material.
Table of Contents
Question
Which of the following statements is true regarding the communication and approval of the internal audit plan?
A. After communicating the internal audit plan to the board, the chief audit executive (CAE) determines the resources needed to implement it.
B. The CAE and the board agree in advance on the criteria that would determine whether changes to the internal audit plan need to be discussed with the board.
C. After communicating the internal audit plan to the board, the CAE should present it to senior management.
D. The internal audit plan should be presented to the board during a meeting without senior management present.
Answer
B. The CAE and the board agree in advance on the criteria that would determine whether changes to the internal audit plan need to be discussed with the board.
Explanation
Per IIA Standard 2020 – Communication and Approval, the CAE must communicate the internal audit activity’s plans and resource requirements, including significant interim changes, to senior management and the board for review and approval. The internal audit plan is typically presented to and approved by the board first.
While the CAE does determine the resources needed to implement the plan (choice A), this is done before, not after, communicating the plan to the board. The plan and resource requirements are presented together for the board’s review and approval.
Presenting the internal audit plan to senior management (choice C) is advisable to get their input and buy-in, but this is not a required step after board approval. The IIA standards specify communicating the plan to senior management and the board, without mandating a sequence.
Discussing the internal audit plan with the board without senior management present (choice D) may occur in some organizations. However, this is not an explicit IIA requirement for communicating and approving the plan.
Importantly, as stated in choice B, the CAE and board should have a shared understanding upfront on what criteria or thresholds would necessitate further discussions with the board regarding plan changes. This allows the internal audit activity flexibility to adjust the plan as needed for emerging risks while keeping the board sufficiently informed. Having these criteria predetermined facilitates an efficient and effective working relationship between the CAE and the board.
To summarize the key points:
- The CAE communicates the internal audit plan and resource requirements to senior management and the board for review and approval
- The plan is typically approved by the board first, before review with senior management
- The CAE and board should agree in advance on criteria for what changes to the approved plan would require further board discussions
- This allows flexibility for the internal audit group while keeping the board adequately informed
IIA-CIA-Part2 certification exam assessment practice question and answer (Q&A) dump including multiple choice questions (MCQ) and objective type questions, with detail explanation and reference available free, helpful to pass the IIA-CIA-Part2 exam and earn IIA-CIA-Part2 certification.