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

Sundaram Textiles Ltd's internal audit head notices that the audit committee has stopped receiving her reports directly; they now pass through the CFO, who edits findings on procurement. Which challenge to internal audit practice does this situation most directly illustrate?

The situation shows impairment of independence and objectivity. Because the CFO edits findings before they reach the audit committee, internal audit cannot report freely. Functional reporting to the audit committee is the safeguard, so interference by an executive whose area is audited is a core challenge to internal audit practice.

  1. AImpairment of independence and objectivity of the internal audit functionCorrect
  2. BLack of adequate sampling techniques
  3. CExcessive use of data analytics tools
  4. DOverlap between statutory and secretarial audit

Explanation

When management filters or edits internal audit reports, the function loses organisational independence and objectivity. Reporting functionally to the audit committee protects against this. The other options describe unrelated issues and do not arise from the facts.

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