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CS Professional · Internal and Forensic Audit · Internal Controls

While testing controls at Ganga Retail Ltd, an internal auditor finds that bank reconciliations are prepared monthly but are not reviewed by any senior officer, and differences remain unresolved for several months. How should the auditor primarily treat this in the report?

The auditor should report it as a control deficiency, stating the condition, risk, cause and a recommendation to management. Preparing reconciliations without review leaves unresolved differences, and the auditor should not take over management's role or hide the issue.

  1. AOmit it because reconciliations are prepared
  2. BReport it as a control deficiency with the risk, cause and recommendation to managementCorrect
  3. CCorrect the reconciliations personally and close the matter
  4. DReport it only to the external auditor

Explanation

A good internal audit finding sets out the condition, risk, cause and recommendation, and goes to management and those charged with oversight. Preparing the reconciliation does not remedy the absence of review, and the auditor should not take over management's role by correcting entries.

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