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CMA Intermediate · Corporate Accounting and Auditing · Audit Risk, Internal Control, Internal Check and Internal Audit

The internal audit function of Kaveri Textiles Ltd is assigned to plan and perform tests to give management and those charged with governance assurance on the design, implementation and operating effectiveness of internal control. Under SA 610 (Revised), which category of activity is this?

This is evaluation of internal control. SA 610 (Revised) says the internal audit function may be assigned to review controls, evaluate their operation, recommend improvements and perform tests giving assurance on design, implementation and operating effectiveness of internal control, so it is not governance, compliance or financial information examination.

  1. AActivities relating to governance
  2. BExamination of financial and operating information
  3. CEvaluation of internal control, under activities relating to internal controlCorrect
  4. DReview of compliance with laws and regulations

Explanation

SA 610 (Revised) describes evaluation of internal control as reviewing controls, evaluating their operation and recommending improvements, including tests that give assurance on design, implementation and operating effectiveness. Examination of financial information concerns the means of identifying, measuring and reporting information and detailed testing of items, which is different.

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