The internal audit activity is asked to review the effectiveness of controls around the disposal of chemical waste. However, the internal auditors on staff lack the necessary skills to conduct this review Which of the following would be the most appropriate approach?

The fundamental issue is the internal audit activity's lack of specialized skills required for the engagement. According to the IIA Standards, when such a competency gap exists, the Chief Audit Executive (CAE) must obtain competent advice and assistance. Engaging an external expert is the most appropriate method to supplement the team's skills. This approach allows the internal audit activity to fulfill its responsibility while ensuring the engagement is conducted with the necessary proficiency and due professional care, as mandated by the Standards. The internal audit team maintains control over the engagement, leveraging the specialist's knowledge to plan the scope, perform procedures, and evaluate evidence effectively.

A. A three-day workshop provides only introductory knowledge, which is insufficient for leading a complex technical audit, thereby violating the proficiency standard.
C. Relying on a previous year's work program with an unskilled team fails to address the core competency gap and ignores potential changes in risks and regulations.
D. Using an employee from the area being audited creates a clear conflict of interest, which would impair the individual objectivity required by the IIA Standards.

1. The Institute of Internal Auditors (IIA). (2017). International Standards for the Professional Practice of Internal Auditing.

Standard 1210 – Proficiency: "The internal audit activity must collectively possess or obtain the knowledge, skills, and other competencies needed to perform its responsibilities."

Standard 1210.A1: "The chief audit executive must obtain competent advice and assistance if the internal auditors lack the knowledge, skills, or other competencies needed to perform all or part of the engagement." This standard directly supports option B as the correct course of action.

Standard 1120 – Individual Objectivity: "Internal auditors must have an impartial, unbiased attitude and avoid any conflict of interest." This standard invalidates option D, as using an employee from the audited department would create a conflict of interest.

2. The Institute of Internal Auditors (IIA). (2017). Implementation Guidance for Standard 1210: Proficiency.

Paragraph: Sourcing and Developing Competency: The guidance elaborates on Standard 1210.A1, stating, "When the internal audit staff does not have the necessary knowledge, skills, or other competencies, the chief audit executive seeks the assistance of external service providers... The external service provider may be contracted to perform the entire engagement, or to supplement the internal audit team." This explicitly endorses the approach in option B.

3. Frigo, M. L. (2002). A Balanced Scorecard Framework for Internal Auditing Departments. Working Paper, The Kellstadt Graduate School of Business, DePaul University.

In the section discussing the "Learning and Growth Perspective" for internal audit, the paper emphasizes the need for continuous skill development and sourcing external expertise for specialized areas to ensure the audit function remains relevant and effective. This aligns with the principle of obtaining competent assistance when internal skills are lacking. (Available through university archives and academic search engines).