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

Sundaram Textiles Ltd. appoints an in-house team that reports to the Audit Committee and reviews whether the company's risk management, control and governance processes are working effectively. Which description best fits this activity?

The activity is internal audit, which is an independent and objective assurance and consulting function. It evaluates and improves risk management, control and governance processes and adds value to operations. It differs from statutory audit, which gives an opinion on the true and fair view of financial statements.

  1. AAn independent, objective assurance and consulting activity designed to add value and improve operationsCorrect
  2. BA statutory examination carried out solely to express an opinion on the true and fair view of the annual financial statements
  3. CA routine bookkeeping function carried out to prepare the trial balance each month
  4. DA tax assessment carried out by the department to determine the tax liability

Explanation

Internal audit is an independent, objective assurance and consulting activity that evaluates and improves risk management, control and governance. The statutory audit option describes the external auditor's role, which focuses on an opinion on the financial statements. Bookkeeping and tax assessment are unrelated to assurance work.

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