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CS Professional · Internal and Forensic Audit · Audit and Investigations

Sunrise Textiles Ltd. of Surat receives an anonymous complaint that its purchase manager is taking kickbacks from a supplier. The audit committee wants a fact-finding exercise limited to this one allegation, to establish what happened and who was involved. Which description best fits this exercise?

It is a targeted investigation. An investigation examines a specific suspected irregularity, here alleged kickbacks, to establish facts, extent and responsibility, unlike an audit or general control review, which covers a wide scope without being triggered by a particular allegation.

  1. AA routine statutory audit of the annual financial statements
  2. BA targeted investigation into a specific suspected irregularityCorrect
  3. CA compliance review of the company's board meeting minutes
  4. DA general review of the internal control framework across all departments

Explanation

An investigation is a focused enquiry into a specific suspected matter, aiming to establish facts, quantify loss and identify those responsible. An audit or general control review is broader and not triggered by a particular allegation, so the other options do not fit.

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