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

Which statement correctly distinguishes internal check from internal audit?

Internal check works continuously within daily operations by dividing duties so that employees' work is checked by others, whereas internal audit is a separate function that reviews and evaluates controls and operations and recommends improvements. The two are therefore different in nature and timing.

  1. AInternal check is performed after the year end by an independent function, while internal audit is built into daily routine
  2. BInternal check operates continuously through the division of duties in day-to-day work, while internal audit is a separate appraisal of controls and operations carried out by an internal audit functionCorrect
  3. CBoth are performed only by the statutory auditor appointed under the Companies Act
  4. DInternal check is a review of operating economy and efficiency, while internal audit covers only the division of clerical work

Explanation

Internal check is part of the routine system, with work divided so staff check one another. Internal audit, as described in SA 610 (Revised), involves reviewing controls, evaluating their operation and recommending improvements. Option A reverses the two roles.

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