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CS Professional · Internal and Forensic Audit · Special Points relating to Internal Audit in various Entities

The internal audit team of a State Public Works Department reviews whether funds were spent only for the purposes and within the limits approved by the legislature, and whether sanctions were obtained before spending. Which type of audit focus does this review mainly represent?

This is a compliance or regularity audit. In government entities, internal auditors verify that expenditure stays within legislative appropriations and carries proper sanction. The scenario describes neither asset valuation, nor fraud investigation, nor a company statutory audit, so compliance review of expenditure is the correct focus.

  1. ACompliance (regularity) audit of expenditure against appropriation and sanctionCorrect
  2. BValuation audit of the department's fixed assets
  3. CForensic audit of suspected collusion among contractors
  4. DStatutory audit of a company under the Companies Act

Explanation

Checking that spending conforms to legislative appropriation and proper sanction is a regularity or compliance review, which is central to government internal audit. The other options deal with asset valuation, a fraud investigation, or a company statutory audit, none of which is described in the scenario.

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