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

Before starting an internal audit of the procurement function at Sagar Engineering Ltd, the audit team holds discussions with the procurement head, walks through the process and identifies key risks. What is the primary purpose of this stage of the engagement?

The purpose is to understand the procurement activity and its risks so that the scope, objectives and audit approach can be planned. Walkthroughs and discussions are planning steps, carried out before detailed testing, reporting or follow-up work.

  1. AIssuing the final audit report to the audit committee
  2. BObtaining an understanding of the activity and its risks to plan the engagement scope and approachCorrect
  3. CPerforming detailed substantive testing of all invoices
  4. DFollowing up on the implementation of earlier recommendations

Explanation

Walkthroughs and risk discussions belong to the planning stage, where the auditor understands the process and its risks in order to set scope, objectives and procedures. Reporting and follow-up come later, and testing follows planning.

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