CS Professional · Internal and Forensic Audit · Practices related to Internal Auditing
Internal audit of Rudra Cements Ltd has 1,200 available audit days for the year. The risk assessment shows that mid-year the company will start a new subsidiary and a major vendor fraud allegation will surface, neither of which was in the original plan. Which action best reflects sound planning practice?
The best action is to revise the plan by reprioritising audits in light of the emerging risks, obtain approval from the audit committee, and report the changes and any resource shortfall. Rigidly following the old plan ignores new risks, and silently dropping reviews fails the communication expectations.
- AContinue strictly with the approved plan and report the new items next year
- BDrop all low-risk reviews permanently without informing anyone
- CRevise the plan by reprioritising audits, with approval of the audit committee, and report the changes and any resource shortfallCorrect
- DAsk the vendor to investigate its own conduct instead
Explanation
The plan must be flexible. When risks change, the auditor reprioritises, communicates the revisions and any resource limits, and obtains approval from the audit committee or those charged with governance. Rigid adherence ignores emerging risk, and unilateral silent dropping breaks communication requirements.
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