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ACCA Strategic Professional · Strategic Business Leader · Internal control and management reporting

Marlow Pharma's internal audit report on a regional plant found weak authorisation of purchases. Management have accepted the finding but have taken no action for nine months. Which role of internal audit is most relevant to resolving this?

Internal audit should follow up its recommendations and escalate the unresolved weakness to the audit committee. This keeps accountability with management for fixing controls while giving those charged with governance visibility, without internal audit taking on management responsibilities.

  1. AFollow-up of recommendations and escalation of unresolved issues to the audit committeeCorrect
  2. BTaking over responsibility for implementing the controls itself
  3. CIgnoring the matter since management accepted the finding
  4. DReporting the issue to the external auditor only

Explanation

Internal audit should monitor whether agreed actions are implemented and escalate persistent failures to the audit committee. Implementing controls itself would compromise independence, and ignoring the finding or telling only the external auditor does not resolve the weakness.

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