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CS Professional · Internal and Forensic Audit · Emerging Issues and Challenges

Hari Steels Ltd. has an internal audit team that spends most of its time on sample-based checking of vouchers. The Audit Committee complains that the reports do not help it understand emerging business risks. Which change in approach best addresses this challenge?

The best response is to move to a risk-based audit plan that focuses on high-risk processes. This aligns audit effort with emerging business risks and gives the Audit Committee useful insight, whereas larger voucher samples only add volume without relevance.

  1. AIncrease the sample size of voucher checks every year
  2. BShift to a risk-based audit plan that focuses on high-risk processesCorrect
  3. CReduce the number of audit reports issued to the Committee
  4. DLimit the audit scope to statutory compliance only

Explanation

The complaint is that the work is not aligned to business risks. A risk-based plan directs audit effort to areas of highest risk and gives the Committee relevant insight. Simply enlarging samples adds volume without relevance, so it does not solve the problem.

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