ACCA Applied Knowledge · Business and Technology · Internal controls
Which of the following best describes the main purpose of an internal audit function within a company?
Internal audit exists to evaluate and help improve risk management, internal control and governance processes. It is not the statutory audit giving an opinion on the financial statements, and it does not set strategy or risk appetite, which are board responsibilities.
- ATo express an independent opinion on whether the published financial statements give a true and fair view
- BTo evaluate and improve the effectiveness of risk management, control and governance processesCorrect
- CTo prepare the annual financial statements for approval by the directors
- DTo set the company's strategic objectives and decide its risk appetite
Explanation
Internal audit is an appraisal activity that evaluates and recommends improvements to risk management, control and governance. The opinion on the financial statements is the external auditor's role, and strategy and risk appetite are set by the board.
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