CS Professional · Internal and Forensic Audit · Internal Audit: Introduction and Overview
Kaveri Textiles Ltd's board asks its internal auditor to review whether the purchase approval process is working efficiently and to suggest improvements, while the statutory auditor separately expresses an opinion on the annual financial statements. Which statement best distinguishes the two roles?
Internal audit evaluates processes, controls and risk management to help management, whereas the statutory audit expresses an independent opinion on whether the financial statements give a true and fair view to the members.
- ABoth are appointed by the shareholders and report only to them
- BInternal audit is mainly concerned with evaluating processes and controls for management, while the statutory audit focuses on an opinion on the true and fair view of financial statementsCorrect
- CInternal audit is concerned only with historical financial statements, while the statutory audit covers operations
- DInternal audit is a legal requirement for every company, while the statutory audit is optional
Explanation
Internal audit is an internal management tool covering operations, controls, risk and efficiency. The statutory audit gives an independent opinion on the financial statements for the members. Options claiming both are shareholder-appointed or that the scopes are reversed are incorrect.
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