Certified Government Auditing Professional (CGAP) Practice Exam

Which of the following statements on risk management most accurately expresses the requirements of various audit standards for government auditors?

1. Under INTOSAI, the audit organization's entire audit program must be justified and documented based on specific consideration of risks.

2. Under The IIA's Standards, auditors have a specific responsibility to monitor and evaluate the organization's risk management system, and to assist the organization in this regard.

3. INTOSAI, IFAC, and The IIA's Standards have no differences in this regard.

4. IFAC does not have a specific standard on risk assessment.

The correct answer is: Under The IIA's Standards, auditors have a specific responsibility to monitor and evaluate the organization's risk management system, and to assist the organization in this regard.

The statement that emphasizes the responsibility of auditors under The IIA's Standards highlights the proactive role that auditors play in relation to an organization's risk management system. Government auditors are not only required to assess risks during an audit, but they also have an obligation to monitor and evaluate the effectiveness of the organization’s risk management processes. This involves determining whether the risk management system is adequate and functioning, and assisting the organization in improving its risk management practices. The IIA’s Standards reinforce the importance of this oversight by recognizing that an integral part of an auditor's duty is related to the risk landscape of the organization. This perspective aligns with modern auditing principles that advocate for a comprehensive understanding of risks as a crucial element in guiding audit activities. Understanding this role is essential for effective governance and stewardship in public sector entities. Such responsibilities contribute to enhancing the accountability and transparency of government operations. By fulfilling this requirement, auditors help ensure that risk management processes facilitate the achievement of organizational goals while addressing potential threats. The other statements do not accurately reflect the nuances of the risk management obligations across different audit standards. While INTOSAI and other standards address risk, they may not assign the same level of direct responsibility for monitoring and assisting with risk management systems as outlined in The IIA's Standards.