CS Professional · Internal and Forensic Audit · Internal Audit: Introduction and Overview
The internal auditor of Bharat Cement Ltd. is asked by the audit committee to assess whether the company's new packaging line is achieving its planned output at the lowest reasonable cost and whether resources are being used wisely. Which type of audit best describes this assignment?
It is an operational or performance audit. The assignment evaluates whether the packaging line achieves its output objectives economically, efficiently and effectively, which goes beyond checking compliance with rules or expressing an opinion on financial statements and is not driven by any suspicion of fraud.
- AOperational (performance) audit focused on economy, efficiency and effectivenessCorrect
- BStatutory financial audit of the packaging division
- CPure compliance audit of Factory Act registers
- DForensic audit of the line supervisor
Explanation
Assessing whether planned output is achieved with the least reasonable cost and wise use of resources is the evaluation of economy, efficiency and effectiveness, the core of an operational audit. A compliance audit would only test adherence to rules, and nothing suggests fraud to justify forensic work.
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