Skip to content

CS Professional · Internal and Forensic Audit · Practices related to Internal Auditing

During fieldwork at a branch of Sundaram Foods Pvt Ltd, an internal auditor observes that the store keeper both receives goods and updates the stock ledger. Which weakness does this most directly indicate, and what is the sensible recommendation?

This shows weak segregation of duties. The same person has physical custody of stock and maintains its records, so misappropriation could be hidden. The auditor should recommend separating custody from record-keeping, for example by assigning the stock ledger to an independent employee.

  1. AWeak segregation of duties; separate custody of goods from record-keepingCorrect
  2. BExcess authorisation limits; raise approval thresholds
  3. CPoor budgeting; prepare a monthly budget
  4. DLack of insurance; take a fire policy

Explanation

One person holding custody of assets and maintaining the related records creates an opportunity for concealed theft. The control remedy is segregation of duties. The other options address different issues not shown in the facts.

Did you get it right without looking?

One question tells you little. A timed set on Practices related to Internal Auditing shows your real accuracy, how long you take and where you lose marks.

Practise Practices related to Internal AuditingFree diagnostic mock

More Practices related to Internal Auditing questions