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CS Professional · Internal and Forensic Audit · Internal Audit: Introduction and Overview

An internal audit report on Bharat Steels Ltd recommended tighter inventory controls. Six months later the audit head wants assurance on the matter. The auditor reviews whether management actually implemented the agreed actions and whether they resolved the risk. Which statement best describes this activity and who retains responsibility for the action itself?

This is follow-up. The auditor verifies whether agreed recommendations were implemented and whether they addressed the risk, but management stays responsible for implementing the actions, preserving the auditor's independence.

  1. AIt is follow-up; management remains responsible for implementing the actions, while the auditor verifies status and effectivenessCorrect
  2. BIt is planning; the auditor is responsible for implementing the actions
  3. CIt is fieldwork; the audit committee implements the actions
  4. DIt is reporting; the statutory auditor implements the actions

Explanation

Follow-up checks whether agreed recommendations were implemented and effective. Implementation is a management responsibility; if the auditor implemented controls, independence would be impaired. The other options mislabel the stage or the responsible party.

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