Certified Internal Auditor (CIA) Part 1: Business Acumen — Question 172

The internal audit activity conducted an organizationwide risk assessment. One of the most significant risks identified is associated with the oil price market. The chief audit executive (CAE) is considering including in the annual audit plan an assessment of the effectiveness of oil price risk management. The manager responsible commented that the assessment was not needed, as market risks were regularly addressed by the financial risk committee. If the CAE decides to include this activity in the annual audit plan anyway, how should it be recorded?

Answer options

• A. A consulting engagement independent of the financial risk committee's review.
• B. A risk assessment.
• C. An assurance engagement.
• D. A joint consulting engagement with input from the financial risk committee.

Correct answer: B

Explanation

The correct answer is B because the CAE's decision to include the assessment aligns with conducting a risk evaluation to identify and mitigate oil price risks. Options A and D suggest consulting engagements, which do not focus on assessing risk directly, while option C refers to assurance engagements that are not the primary purpose here.