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

During a review at Patel Logistics Ltd., the internal auditor finds that purchase orders above a set limit are being issued without approval. She reports this to the Audit Committee with a recommendation. Which objective of internal audit does this primarily illustrate?

This illustrates evaluating the adequacy and effectiveness of internal controls. By detecting purchase orders issued without required approval, the internal auditor identifies a control weakness and reports it with a recommendation to the Audit Committee, which is a core objective of internal audit.

  1. AEvaluating the adequacy and effectiveness of internal controlsCorrect
  2. BDetermining the final tax liability of the company
  3. CIssuing the audit opinion on consolidated accounts
  4. DAppointing the vendors for future purchases

Explanation

Finding that approval controls are bypassed shows the auditor assessing whether controls are adequate and operating effectively, then reporting with recommendations. Tax determination, consolidated opinion and vendor appointment are not internal audit functions.

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