According to IIA guidance, which of the following statements is true regarding due professional care?

According to IIA guidance, which of the following statements is true regarding due professional care?
A . Internal auditors must exercise due professional care to ensure that all significant risks will be identified.
B . Internal auditors must apply the care and skill expected of a reasonably prudent and competent internal auditor.
C . Due professional care requires the internal auditor to conduct extensive examinations and verifications to ensure fraud does not exist.
D . Due professional care is displayed during a consulting engagement when the internal auditor focuses on potential benefits of the engagement rather than the cost

Answer: B

Explanation:

Due professional care is a critical concept in internal auditing, ensuring that auditors conduct their work with the necessary diligence and competence.

Definition and Standards: According to the IIA’s International Standards for the Professional Practice of Internal Auditing (Standards), specifically Standard 1220 C Due Professional Care, internal auditors must apply the care and skill expected of a reasonably prudent and competent internal auditor.

Reference: Standard 1220 emphasizes that internal auditors must consider the extent of work needed to achieve the engagement’s objectives and the cost of assurance in relation to potential benefits.

Expectation of Competence: The standard requires auditors to use their professional judgment and to exercise the level of skill and care that a reasonably prudent internal auditor would use in similar circumstances.

Practical Example: This includes evaluating the nature and complexity of the engagement, the adequacy and effectiveness of risk management, and control processes relevant to the engagement. Comprehensive, Not Excessive: While due professional care involves being thorough, it does not mandate exhaustive procedures such as those implied in options A and C.

Clarification: Option A overstates the requirement by implying that all significant risks must be identified, which is not always feasible.

Clarification: Option C misinterprets due professional care by suggesting that extensive examinations and verifications to ensure fraud does not exist are always necessary, which is beyond the typical scope of many audits.

Cost vs. Benefit in Consulting: Option D refers to consulting engagements and the consideration of benefits over cost, which is a part of due professional care but does not capture the comprehensive expectation of care and skill.

Clarification: Due professional care in consulting engagements is about balancing benefits and costs but also involves ensuring quality and thoroughness appropriate to the engagement’s objectives. Conclusion: The correct answer is B, as it accurately reflects the IIA’s guidance that internal auditors must apply the care and skill expected of a reasonably prudent and competent internal auditor.