AUI3704
EXAM PACK
FOR ASSISTANCE WITH THIS MODULE +27 67 171 1739
,AUI3704 OCTOBER NOVEMBER 2025 EXAM MEMO
QUESTION 1
(Each question counts 1 mark)
1.1
An internal auditor often encounters unusual problems when performing an
engagement at a foreign subsidiary. Which of the following statements is false with
respect to the performance of international audit engagements?
A. The IIA Standards do not apply outside of the United States of America (USA)
B. The internal auditor should determine whether managers are in compliance with
local laws
C. There may be justification for having different organisational policies at foreign
branches
D. It is preferable to have multilingual internal auditors conduct engagements at
branches in foreign countries
Correct answer: A
Explanation:
The IIA Standards apply globally, not only in the USA. Internal auditing is an
international profession, and the Standards are intended for use worldwide. The
other options are valid considerations in international engagements.
,1.2
Internal auditing has planned an engagement to evaluate the effectiveness of the
quality assurance department as it affects the receipt of goods, the transfer of goods
into production, and costs related to scrap and defective items. The engagement
client argues that such an engagement is not within the scope of internal audit and
should only be reviewed by the quality assurance department. What is the most
appropriate response?
A. Refer to the internal audit activity’s charter and the approved engagement
plan that includes the area designated for evaluation in the current period
B. Because quality assurance is a new function, seek management approval to act
as mediator
C. Indicate that the engagement will evaluate the function only according to quality
assurance standards
D. Terminate the engagement because it will not be productive without the client’s
cooperation
Correct answer: A
Explanation:
The internal audit charter and approved audit plan define the scope of internal audit
activities. If the engagement is included, internal audit has the authority to proceed
regardless of client resistance.
1.3
, Which one of the following conditions, by themselves, could affect the
independence of the internal audit activity?
I. The chief executive officer accused the new auditor of not acting in the best
interests of the organisation
II. The majority of audit committee members come from within the organisation
III. The internal audit activity’s charter has not been approved by the board
A. I only
B. II only
C. II and III only
D. I, II and III
Correct answer: D
Explanation:
All three conditions individually threaten independence. Accusations by
management, lack of independent oversight, and absence of board approval of the
charter each impair internal audit independence.
1.4
To avoid being the apparent cause of conflict between senior management and the
board, the chief audit executive (CAE) should:
A. Communicate all engagement results to senior management and the board
B. Strengthen independence through the organisational structure
C. Discuss all reports with the board before senior management
EXAM PACK
FOR ASSISTANCE WITH THIS MODULE +27 67 171 1739
,AUI3704 OCTOBER NOVEMBER 2025 EXAM MEMO
QUESTION 1
(Each question counts 1 mark)
1.1
An internal auditor often encounters unusual problems when performing an
engagement at a foreign subsidiary. Which of the following statements is false with
respect to the performance of international audit engagements?
A. The IIA Standards do not apply outside of the United States of America (USA)
B. The internal auditor should determine whether managers are in compliance with
local laws
C. There may be justification for having different organisational policies at foreign
branches
D. It is preferable to have multilingual internal auditors conduct engagements at
branches in foreign countries
Correct answer: A
Explanation:
The IIA Standards apply globally, not only in the USA. Internal auditing is an
international profession, and the Standards are intended for use worldwide. The
other options are valid considerations in international engagements.
,1.2
Internal auditing has planned an engagement to evaluate the effectiveness of the
quality assurance department as it affects the receipt of goods, the transfer of goods
into production, and costs related to scrap and defective items. The engagement
client argues that such an engagement is not within the scope of internal audit and
should only be reviewed by the quality assurance department. What is the most
appropriate response?
A. Refer to the internal audit activity’s charter and the approved engagement
plan that includes the area designated for evaluation in the current period
B. Because quality assurance is a new function, seek management approval to act
as mediator
C. Indicate that the engagement will evaluate the function only according to quality
assurance standards
D. Terminate the engagement because it will not be productive without the client’s
cooperation
Correct answer: A
Explanation:
The internal audit charter and approved audit plan define the scope of internal audit
activities. If the engagement is included, internal audit has the authority to proceed
regardless of client resistance.
1.3
, Which one of the following conditions, by themselves, could affect the
independence of the internal audit activity?
I. The chief executive officer accused the new auditor of not acting in the best
interests of the organisation
II. The majority of audit committee members come from within the organisation
III. The internal audit activity’s charter has not been approved by the board
A. I only
B. II only
C. II and III only
D. I, II and III
Correct answer: D
Explanation:
All three conditions individually threaten independence. Accusations by
management, lack of independent oversight, and absence of board approval of the
charter each impair internal audit independence.
1.4
To avoid being the apparent cause of conflict between senior management and the
board, the chief audit executive (CAE) should:
A. Communicate all engagement results to senior management and the board
B. Strengthen independence through the organisational structure
C. Discuss all reports with the board before senior management
