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CS Professional · Internal and Forensic Audit · Special Points relating to Internal Audit in various Entities

Sahyadri Bank Ltd. has a large network of branches. Its internal audit head wants the audit plan to direct more audit hours to branches handling heavy cash volumes and high-value credit exposures than to low-activity branches. Which approach is the head following?

The head is following a risk-based internal audit. Audit effort and frequency are allocated according to the risk profile of each branch or activity, so high cash volumes and large credit exposures get more audit time, unlike equal-time rotational audits or after-the-event forensic work.

  1. ARisk-based internal auditCorrect
  2. BRoutine statutory audit sampling
  3. CUniform rotational audit with equal time per branch
  4. DPost-event forensic investigation

Explanation

A risk-based internal audit allocates audit effort in proportion to the inherent risk of each branch or activity, such as cash handling and credit exposure. Equal time per branch ignores risk differences, and forensic investigation happens after a suspected fraud, not for planning.

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