ACCA Strategic Professional · Strategic Business Leader · Audit and compliance
Mereth Energy's board asks internal audit to review whether the new supplier onboarding process achieves value for money and to advise on redesigning its controls. Which feature of this request is most characteristic of internal audit as opposed to external audit?
The defining feature is that management and the board decide the scope, which can include operational effectiveness, efficiency and control design. External audit has a statutory scope aimed at an opinion on the financial statements for shareholders, so the other features describe external audit.
- AThe work is required by law and addressed to shareholders
- BThe scope is determined by management and the board and covers operational effectiveness and efficiency, not just financial reportingCorrect
- CThe work results in an opinion on whether financial statements show a true and fair view
- DThe reviewers must be independent of the company's board and appointed by shareholders
Explanation
Internal audit scope is set by the board or management and can include operations, value for money, risk and governance. External audit scope is set by law and focuses on financial statements, with an opinion for shareholders.
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