ACCA Strategic Professional · Strategic Business Leader · Audit and compliance
Halden Energy's internal auditors have completed a value-for-money review of maintenance contracts. The review found overspending, but management argues internal audit should only test compliance with procedures and not comment on economy, efficiency and effectiveness. The chief audit executive also wants to review the design of the new risk register, which the risk committee drafted. Which response is most consistent with the modern role of internal audit?
Internal audit may review economy, efficiency and effectiveness and assess the design of the risk register, but it must not own risk management decisions. Limiting it to compliance testing is outdated, and owning the register would compromise its objectivity.
- AInternal audit may examine economy, efficiency and effectiveness and can review the risk register's design, but should not take ownership of risk management decisionsCorrect
- BInternal audit should be limited to compliance testing, because operational reviews are management's exclusive domain
- CInternal audit should own and update the risk register so that it remains objective
- DInternal audit should avoid the risk register entirely as risk is outside its remit
Explanation
Modern internal audit extends beyond compliance to value for money and evaluating risk management. It may advise on and assess the risk register, but taking ownership or making risk decisions would impair objectivity. Therefore the first option is correct, while the others either narrow the role or compromise independence.
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