Skip to content

CS Professional · Internal and Forensic Audit · Emerging Issues and Challenges

Sagar Textiles Ltd. outsources its internal audit to a firm that also designs and implements the company's new ERP controls. The head of internal audit now has to review those same controls. What is the main challenge this creates?

The main challenge is impairment of objectivity. The firm would be reviewing controls it designed itself, creating a self-review threat that compromises independence, so the audit opinion on those ERP controls may not be credible without separation of roles or independent review.

  1. AImpairment of objectivity because the auditor reviews controls it designedCorrect
  2. BExcess reporting to the statutory auditor
  3. CInability to use data analytics tools
  4. DLack of a written audit charter

Explanation

Auditing controls one has designed creates a self-review threat, which impairs independence and objectivity. The other options are not caused by the facts given. Safeguards include assigning separate teams or having another party review the controls.

Did you get it right without looking?

One question tells you little. A timed set on Emerging Issues and Challenges shows your real accuracy, how long you take and where you lose marks.

Practise Emerging Issues and ChallengesFree diagnostic mock

More Emerging Issues and Challenges questions