Skip to content

CS Professional · Internal and Forensic Audit · Practices related to Internal Auditing

Sundaram Textiles Ltd's internal audit head is preparing the annual audit plan. She lists all auditable units such as procurement, payroll, treasury and dispatch, and then ranks them by the likelihood and impact of things going wrong. What is this approach to building the plan best called?

This is risk-based internal audit planning. The head of internal audit identifies auditable units and ranks them by likelihood and impact of risk, so that audit resources are directed to the highest-risk areas first, unlike cyclical rotation, which covers units at fixed intervals regardless of risk.

  1. ARisk-based internal audit planningCorrect
  2. BCyclical rotation planning
  3. CStatutory audit sampling
  4. DPost-event forensic planning

Explanation

Ranking auditable units by likelihood and impact of adverse events is the core of risk-based planning, which directs audit effort to higher-risk areas. Cyclical rotation covers units at fixed intervals regardless of risk, so it does not fit this description.

Did you get it right without looking?

One question tells you little. A timed set on Practices related to Internal Auditing shows your real accuracy, how long you take and where you lose marks.

Practise Practices related to Internal AuditingFree diagnostic mock

More Practices related to Internal Auditing questions