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

The board of Kaveri Pharma Ltd asks its internal audit head, Ms Nair, to review the economy, efficiency and effectiveness of the company's warehouse and dispatch operations, including non-financial activities. Which statement best describes this assignment under SA 610 (Revised)?

It is a review of operating activities and is within internal audit scope. SA 610 (Revised) says the function may review the economy, efficiency and effectiveness of operating activities, expressly including non-financial activities of an entity, such as warehousing and dispatch.

  1. AIt is a review of operating activities, which falls within the scope of an internal audit functionCorrect
  2. BIt is outside internal audit scope because it involves non-financial activities
  3. CIt is a review of compliance with laws and regulations only
  4. DIt is an evaluation of the governance process on communication among those charged with governance

Explanation

SA 610 (Revised) states that the internal audit function may be assigned to review the economy, efficiency and effectiveness of operating activities, including non-financial activities. So the assignment is within scope. Option B contradicts the express mention of non-financial activities.

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