Chapter 15 - Illustrative Solutions - FINAL.doc - CHAPTER 15 THE CONSULTING ENGAGEMENT Illustrative Solutions Review Questions 1 An internal audit

Chapter 15 - Illustrative Solutions - FINAL.doc - CHAPTER...

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Internal Auditing: Assurance and Advisory Services,3rdEdition. © 2013 by The Institute of Internal Auditors Research Foundation, 247 Maitland Avenue, Altamonte Springs, FL 32701 USA IS15-1CHAPTER 15THE CONSULTING ENGAGEMENTIllustrative SolutionsReview Questions1.An internal audit function is uniquely qualified add value by providing insights through its consultingactivities because of its risk and control expertise. This expertise can be leveraged to assist the organization in keeping abreast of emerging risks. For example, the internal audit function can act in aconsulting capacity by initiating discussions that explore the increased risk in areas that are particularly affected by an economic downturn. Additionally, because internal auditors are very familiar with most, if not all, areas of the organization due to the assurance services they perform, they are acutely aware of the changes occurring in these areas. They are in a unique position to advisemanagement about how to deal effectively with these changes.2.There are several fundamental differences between assurance services and consulting services: the number of parties involved in the engagement, the application of The Institute of Internal Auditors’ (IIA’s) International Standards for the Professional Practice of Internal Auditing(Standards)to both types of services, the purpose of the engagement, and communication of the results of the engagement. 3.The three types of consulting engagements performed by the internal audit function are:Advisory (for example, advising on control design).Training (for example, training on risk management and internal control).Facilitative (for example, facilitating management’s control self-assessment). 4.Blended engagements incorporate elements of both consulting and assurance services into one consolidated approach. Blended engagements are indicated when it is cost-effective or otherwise desirable to combine a component of assurance, such as the independent assessment of a process or controls, as well as a component of consulting, such as advising or facilitation.5.The three ways that potential consulting engagements are identified are: Engagements are proposed during the annual risk assessment process and, if identified as high-priority, included in the annual internal audit plan.Specific engagements are requested by management.New or changing conditions warrant internal audit attention.6.The internal audit plan is created on an annual basis and includes those areas within the organization that have gone through the risk assessment process and were selected as priorities for the internal audit function. For many internal audit functions, these priorities represent both assurance and consulting engagements. Although, assurance engagements typically make up the bulk of the internal audit plan, some consulting engagements, such as systems development, known due diligence, and
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  • Summer '16
  • Simon Lee
  • internal audit function, internal auditor

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