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

Under SA 315, what is stated about the objectives, scope and status of an entity's internal audit function?

SA 315 states that the objectives, scope, responsibilities and status of an internal audit function vary widely, depending on the entity's size and structure and the requirements of management and, where applicable, those charged with governance. These may be documented in an internal audit charter or terms of reference.

  1. AThey are fixed by the statutory auditor for all entities
  2. BThey vary widely with the size and structure of the entity and the requirements of management and, where applicable, those charged with governanceCorrect
  3. CThey are identical for every company because the function is prescribed uniformly
  4. DThey are restricted to detailed checking of ledger postings

Explanation

SA 315 says the objectives, scope, responsibilities and status of the internal audit function, including authority and accountability, vary widely and depend on entity size, structure and the requirements of management and those charged with governance. They may be set out in a charter or terms of reference. The other options contradict this variability.

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