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CS Professional · Internal and Forensic Audit · Practices related to Internal Auditing

The internal audit team of Bharat Logistics Ltd has 1,000 available audit hours. Four units are ranked: Unit A (high risk, last audited 3 years ago), Unit B (high risk, audited 6 months ago with clean results and no changes since), Unit C (medium risk, never audited), Unit D (low risk, audited last year). Under a risk-based approach, which allocation of the first priority is most defensible?

Unit A should be first priority because it combines a high risk rating with a long gap of three years since the last audit. Unit B was recently audited clean with no changes, while C and D carry lower risk, so audit history alone or ease of completion should not override risk.

  1. AUnit D, because it is the easiest to complete
  2. BUnit B, because it carries a high risk rating
  3. CUnit A, because of high risk and the long gap since the last auditCorrect
  4. DUnit C, because it has never been audited regardless of risk

Explanation

Priority depends on risk rating combined with time since last audit and recent results. Unit A is high risk and stale. Unit B is high risk but recently audited clean with no change, so its current exposure is lower. Unit C is medium risk and D low risk, so neither outranks A merely because of never being audited or ease.

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