CS Professional · Internal and Forensic Audit · Practices related to Internal Auditing
Internal audit at Gomti Engineering Ltd noticed during follow-up that management had not acted on a high-risk recommendation on unauthorised vendor master changes and said it had decided to accept the risk. The chief audit executive believes the residual risk is unacceptable to the company. What is the most appropriate course of action?
The chief audit executive should discuss it with senior management and, if unresolved, escalate to the audit committee or board. Deleting the finding hides a significant risk, and implementing the control would impair independence because management owns controls. Delay leaves a high-risk exposure unaddressed.
- ADiscuss with senior management and, if unresolved, escalate to the audit committee or boardCorrect
- BDelete the finding from the report since management has accepted the risk
- CImplement the control personally in the vendor master system
- DWait until the next annual audit before raising the matter again
Explanation
Where management accepts a risk the chief audit executive considers unacceptable, the matter is first discussed with senior management and, if still unresolved, communicated to the board or audit committee. Deleting the finding compromises reporting integrity. Implementing the control would impair independence, since auditors must not take management responsibilities. Waiting leaves a high risk exposed.
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.
More Practices related to Internal Auditing questions
- Internal auditors at a Gujarat chemicals company use a flowchart of the order-to-cash cycle and a questionnaire. The flowchart shows that th…
- An internal auditor at a Chennai retail chain wants to test whether sales returns are being used to conceal cash misappropriation. Using aud…
- The internal audit team of Bharat Logistics Ltd has 1,000 available audit hours. Four units are ranked: Unit A (high risk, last audited 3 ye…
- Before starting fieldwork at the procurement department of Kaveri Textiles Ltd, the internal audit team leader prepares a document setting o…
- During fieldwork at Sagar Foods Pvt Ltd, an internal auditor wants to confirm that goods recorded as dispatched in the register were actuall…
- The internal audit charter of Himalaya Pharma Ltd places the Chief Audit Executive under the CFO for reporting and budget approval. The CFO …