CS Professional · Internal and Forensic Audit · Practices related to Internal Auditing
Internal audit at Narmada Foods Ltd reported in March that bank reconciliations were not being prepared monthly. Management agreed to prepare them from April. In the follow-up review in July, the auditor finds reconciliations prepared for April and May but not for June. How should the auditor classify the status of this recommendation?
The recommendation is partially implemented because the control operated for April and May but lapsed in June. Follow-up should record this status and escalate the remaining gap to the audit committee. Closing it would wrongly treat an inconsistently operating control as effective.
- APartially implemented, and the matter should be reported to the audit committee with the remaining gapCorrect
- BFully implemented, since the practice has started
- CNot applicable, since management already accepted it
- DClosed, because two of three months were completed
Explanation
Implementation is sustained only if the control operates consistently. Missing the June reconciliation means the recommendation is only partly implemented. The auditor should report the status and the remaining gap to those charged with oversight rather than closing it.
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