Skip to content

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

Himalaya Foods Ltd is a small company with a two-person internal audit team reporting to the CFO. Its competitor, Deccan Steels Ltd, has a large internal audit department reporting to the audit committee with a broad mandate. A student concludes that both must have identical internal audit objectives and scope. According to SA 610 (Revised), this conclusion is:

The conclusion is incorrect. SA 610 (Revised) states that the objectives, scope, responsibilities and organisational status of an internal audit function vary widely, depending on the entity's size and structure and the requirements of management and, where applicable, those charged with governance.

  1. ACorrect, because the standard prescribes a uniform scope for all entities
  2. BIncorrect, because objectives, scope, responsibilities and organisational status vary widely with the entity's size, structure and management or governance requirementsCorrect
  3. CCorrect, because scope is fixed by the external auditor
  4. DIncorrect, because only listed companies may have an internal audit function

Explanation

SA 610 (Revised) states that objectives and scope of an internal audit function, the nature of its responsibilities and its organisational status, including authority and accountability, vary widely and depend on size, structure and the requirements of management and, where applicable, those charged with governance. So no uniform scope exists.

Did you get it right without looking?

One question tells you little. A timed set on Internal Audit and Performance Audit shows your real accuracy, how long you take and where you lose marks.

Practise Internal Audit and Performance AuditFree diagnostic mock

More Internal Audit and Performance Audit questions