CS Professional · Internal and Forensic Audit · Practices related to Internal Auditing
Before finalising the audit plan for Kaveri Pharma Ltd, the internal auditor meets the CFO, plant heads and the audit committee chair to learn about new regulations, a planned ERP migration and recent complaints. What is the main purpose of these discussions?
The purpose is to understand the entity's objectives, risks and recent changes so the audit plan reflects current priorities. Such input feeds the auditor's independent risk assessment, but it neither transfers control responsibility to the auditor nor replaces the auditor's own assessment of risk.
- ATo obtain management's approval for the audit opinion
- BTo understand the entity's objectives, risks and changes so that the plan reflects current prioritiesCorrect
- CTo transfer responsibility for internal controls to the auditor
- DTo replace the need for any risk assessment by the auditor
Explanation
Consultation with management and the audit committee helps the auditor understand objectives, emerging risks and changes, feeding the risk assessment. The auditor does not take over control responsibility, and such discussions inform but do not replace independent risk assessment.
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