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

Sunrise Textiles Ltd, Surat, has asked its internal audit function to examine how the company identifies, measures, classifies and reports its financial and operating information, and to make specific inquiry into individual items, including detailed testing of transactions and balances. Under SA 610 (Revised), which type of internal audit activity does this assignment represent?

The assignment is an examination of financial and operating information. SA 610 (Revised) describes this as reviewing how information is identified, recognized, measured, classified and reported, and making specific inquiry into items through detailed testing of transactions, balances and procedures.

  1. AReview of compliance with laws and regulations
  2. BExamination of financial and operating informationCorrect
  3. CReview of operating activities for economy and efficiency
  4. DEvaluation of the governance process on ethics and values

Explanation

SA 610 (Revised) describes examination of financial and operating information as reviewing the means used to identify, recognize, measure, classify and report such information, with specific inquiry into items, including detailed testing of transactions, balances and procedures. The facts match this exactly. Compliance review concerns laws and policies, not the reporting of information.

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