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CS Professional · Internal and Forensic Audit · Internal Audit Engagements and Planning

While building the audit universe for Bharat Logistics Pvt Ltd, the head of internal audit lists all processes, locations, systems and subsidiaries, then ranks each by risk. What is the primary purpose of this ranking?

Risk ranking the audit universe is done to prioritise which auditable units are covered and how frequently, given limited audit resources. High-risk units get more frequent attention, while low-risk units may be covered less often. It does not shift risk ownership or require annual audit of every unit.

  1. ATo decide which auditable units get audit coverage and how often, within limited resourcesCorrect
  2. BTo remove low-ranked units from the company's organisation chart
  3. CTo transfer responsibility for risk management to the audit team
  4. DTo prove that every unit is audited every year

Explanation

The audit universe is the full set of auditable units. Risk ranking lets the function prioritise coverage and frequency when resources are limited, so high-risk units are audited more often. It does not remove units from the organisation, shift risk ownership from management, or require annual coverage of everything.

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