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CS Professional · Internal and Forensic Audit · Internal Audit: Introduction and Overview

Meera, the internal auditor of Kaveri Textiles Ltd, is asked by the CFO to also approve the monthly vendor payments she reviews. Which concern is most directly raised by this request?

The main concern is loss of independence and objectivity. Approving vendor payments is a management responsibility, so Meera would end up auditing transactions she herself authorised, which compromises the impartiality expected of an internal auditor.

  1. ALoss of her independence and objectivity because she would audit her own decisionsCorrect
  2. BBreach of the statutory auditor's reporting duty
  3. CFailure to follow the cost audit rules
  4. DReduction in the sample size she must test

Explanation

Approving payments is an operational management function. If an internal auditor performs it, she would later review her own work, which impairs independence and objectivity. The other options concern unrelated matters.

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