2.

One definition of risk is that is the possibility that an event will occur and adversely affect the
achievement of an objective. An illustrative objective and an event are presented below :
Objective Event
To safeguard the city’s citizen and resources An accident at a four-way intersection

a. Identify three potential adverse consequences of the event occurring

- There are casualties
- The government’s asset might be damaged
- There will be traffic jam due because of the accident
b. Identify three inherent risk factors that make the event more or less probable are :
- The speed limit at the intersection
- The volume of vehicles and pedestrians
- The road condition at the intersection
c. The city’s management must decide how to respond to the risk. Two of its choices are to :
1. Avoid the risk  Give zebra cross for the pedestrian or build a bridge so that they
don’t have to walk cross the road
2. Reduce the risk to an acceptable level  Set the speed limit at appropriate level so that
the driver can still aware with the surroundings and go.

5. Internal auditors provide two types of services : Assurance services and consulting services
a. How do these two types of services differ in terms of purpose?
Assurance services  to provide independent assessments, based on an objective examination of
evidence, of an organization’s governance, risk management, and control processes
Consulting services  to provide advice, based on objective examination of evidence, that adds
value and improves an organization’s governance, risk management, and control processes

b. In what other ways do consulting engagements differ from assurance engagement?

Assurance engagement determined by Internal Audit Function
Consulting engagement are subject to agreement with the customer