Skip to content

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

The CFO of Ganga Retail Ltd says, 'We already have internal control, so internal audit is a duplication.' Which response is most accurate?

Internal audit is not a duplicate of internal control. Controls are management's operating procedures, while internal audit independently evaluates whether they are adequate and working effectively and recommends improvements. Controls cannot objectively assess themselves, so independent review gives management and the board added assurance.

  1. AInternal audit independently evaluates whether the controls are adequate and operating effectively, which controls cannot do for themselvesCorrect
  2. BInternal audit is only needed if the statutory auditor requires it
  3. CInternal audit is responsible for designing and operating all controls
  4. DInternal control and internal audit are the same thing under different names

Explanation

Controls are designed and run by management as part of operations; they cannot objectively assess themselves. Internal audit provides independent assurance on adequacy and effectiveness and recommends improvements. If internal audit operated the controls it would lose independence, so the other statements are incorrect.

Did you get it right without looking?

One question tells you little. A timed set on Internal Audit: Introduction and Overview shows your real accuracy, how long you take and where you lose marks.

Practise Internal Audit: Introduction and OverviewFree diagnostic mock

More Internal Audit: Introduction and Overview questions