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

The internal auditor of Godavari Bank reports directly to the Audit Committee of the Board on the effectiveness of the bank's risk management and control systems, and not to the branch operations head. What is the main benefit of this reporting line?

The main benefit is that it preserves the independence and objectivity of the internal audit function. Reporting to the Audit Committee rather than operations management keeps the auditor free from influence by the people being audited, so findings on risk and controls can be reported without pressure.

  1. AIt preserves the independence and objectivity of the internal audit functionCorrect
  2. BIt removes the need for any management response
  3. CIt makes the internal auditor responsible for executing operations
  4. DIt replaces the statutory auditor's role

Explanation

Reporting to the Audit Committee keeps the auditor free from influence by those whose functions are audited, which protects independence and objectivity. Management still responds to findings, the auditor does not run operations, and statutory audit remains separate.

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