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

Which of the following is an activity relating to risk management that SA 610 (Revised) says an internal audit function may perform?

Performing procedures to assist the entity in detecting fraud is a risk management activity that SA 610 (Revised) says the internal audit function may carry out, alongside identifying and evaluating significant risk exposures. Setting the tone, authorising transactions and preparing financial statements are management or governance responsibilities.

  1. APerforming procedures to assist the entity in the detection of fraudCorrect
  2. BFixing the tone at the top of the control environment
  3. CAuthorising all large non-recurring transactions
  4. DPreparing the entity's financial statements for approval

Explanation

Under activities relating to risk management, SA 610 (Revised) says the internal audit function may identify and evaluate significant exposures to risk and may perform procedures to assist in detecting fraud. The control environment tone is set by governance and management, per SA 315. Authorising transactions and preparing statements are management duties.

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