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CS Professional · Compliance Management, Audit and Due Diligence · Internal Audit and Performance Audit

Sundaram Textiles Ltd has an internal audit function. The audit committee asks the head of internal audit what the function may be assigned to do. Which of the following falls within the typical objectives and scope of an internal audit function as described in SA 610 (Revised)?

Reviewing the economy, efficiency and effectiveness of operating activities, including non-financial ones, is a typical internal audit scope item under SA 610 (Revised). Signing the external auditor's report, forming the external opinion or approving the auditor's remuneration are not internal audit responsibilities.

  1. AReviewing the economy, efficiency and effectiveness of operating activities, including non-financial activitiesCorrect
  2. BSigning the statutory auditor's report on the financial statements
  3. CDeciding the final audit opinion of the external auditor
  4. DApproving the remuneration of the external auditor

Explanation

SA 610 (Revised) lists review of operating activities, covering economy, efficiency and effectiveness including non-financial activities, as a typical assignment of the internal audit function. Signing the external auditor's report, forming the external opinion and fixing the auditor's fee are not internal audit activities; the other options are therefore wrong.

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