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CS Professional · Internal and Forensic Audit · Internal Audit: Introduction and Overview

Sunrise Textiles Ltd's internal auditor spends most of the year checking whether purchase orders, goods receipt notes and supplier invoices are matched and approved before payment is released. Which type of internal audit is primarily being performed?

This is a compliance audit of procurement and payables. The auditor is testing whether staff follow prescribed procedures, such as matching purchase orders, receipt notes and invoices and obtaining approval before payment, rather than investigating fraud, reviewing IT systems or assessing social impact.

  1. ACompliance audit of the procurement and payables processCorrect
  2. BInvestigative audit of a suspected fraud
  3. CInformation systems audit of the ERP software
  4. DSocial audit of supplier working conditions

Explanation

Checking that documents are matched and approved as per laid-down procedure tests adherence to established policies and controls, which is the essence of a compliance audit. There is no suspicion of fraud, no focus on IT general controls and no social objective, so the other options do not fit.

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