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CS Professional · Compliance Management, Audit and Due Diligence · Internal Audit and Performance Audit

Bharat Logistics Ltd has a team that performs routine month-end bank reconciliation checks and a separate internal audit function. The external auditor asks what distinguishes the internal audit function's activities from other monitoring control activities in the entity. According to SA 610 (Revised), what is the distinguishing feature?

The distinguishing feature is the application of a systematic and disciplined approach to planning, performing, supervising, reviewing and documenting its activities. SA 610 (Revised) states this separates internal audit from other monitoring controls, such as routine reconciliation checks performed within the entity.

  1. AIts application of a systematic and disciplined approach to planning, performing, supervising, reviewing and documenting its activitiesCorrect
  2. BIts reporting directly to the Registrar of Companies
  3. CIts being performed by employees of the entity rather than outsiders
  4. DIts exclusive focus on the accuracy of the financial statements

Explanation

The standard says the systematic and disciplined approach to planning, performing, supervising, reviewing and documenting activities distinguishes internal audit from other monitoring control activities. Being staffed by employees is not the stated distinguishing factor, as routine reconciliation staff are also employees.

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