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CS Professional · Internal and Forensic Audit · Internal Audit Tools and Techniques

Internal auditor of Bharat Textiles Ltd prepares a risk register listing each auditable unit and scores it on likelihood and impact before deciding where to spend audit hours. Which tool is the auditor primarily using to prioritise audit effort?

The auditor is using a risk assessment matrix over the audit universe. Each unit is scored on likelihood and impact, so audit hours go to the highest-risk areas first. Vouching, bank reconciliations and stock verification are checking procedures, not prioritisation tools.

  1. ARisk assessment matrix used for audit universe prioritisationCorrect
  2. BPhysical verification of inventory at year end
  3. CBank reconciliation statement review
  4. DVouching of payments to supporting invoices

Explanation

Scoring auditable units on likelihood and impact is a risk assessment matrix applied to the audit universe. It directs audit time to high-risk areas. The other options are substantive checking procedures and do not rank areas by risk.

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