A Company Has Established Its Environmental Audit Activity as Part

question 399

Multiple Choice

A company has established its environmental audit activity as part of its legal department rather than part of its internal audit activity, which reports to the audit committee. The board has requested that the chief audit executive (CAE) provide an annual opinion on whether environmental risks are being properly addressed. In these circumstances, the CAE should recommend to the audit committee that the internal audit activity:

• A) Review the recommendations in all environmental audit reports.
• B) Discuss with the environmental auditors the results of their reviews.
• C) Periodically carry out a quality assessment of the environmental audit activity.
• D) Include a review of environmental issues in some internal audit engagements.

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Definitions:

Unit Fixed

This specifies a cost or charge that remains constant per unit regardless of changes in the level of activity or volume of production.

Costs

Costs refer to the expenditures incurred by a business in the process of generating revenues.

Unit Contribution Margin

The difference between the selling price per unit and the variable cost per unit.

Fixed Costs

Expenses that remain constant regardless of the amount of production or sales, including rent, wages, and insurance premiums.