CS Professional · Internal and Forensic Audit · Emerging Issues and Challenges
Kaveri Pharma Ltd has a three-person internal audit team covering 14 plants and a new ERP. The team lacks data analytics skills and cannot test full populations. Which response is most appropriate to address this challenge?
The best response is co-sourcing with a specialist firm, training staff in data analytics, and following a risk-based audit plan approved by the audit committee. This closes the skills and resource gap transparently, while silent scope cuts, sole reliance on management self-assessment or shifting work to the statutory auditor leave risks unaddressed or compromise independence.
- AReduce the audit scope to only those areas where manual testing is possible, without informing the audit committee
- BAdopt a co-sourcing arrangement with a specialist firm and train staff in analytics, with a risk-based plan approved by the audit committeeCorrect
- CRely entirely on management's self-assessment of controls
- DAsk the statutory auditor to take over all internal audit work
Explanation
Resource and skill gaps are usually addressed through co-sourcing, upskilling and a risk-based plan approved by the audit committee. Silently cutting scope hides risk, self-assessment alone lacks independence, and handing the work to the statutory auditor would compromise the auditor's independence.
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