When Developing an Effective Risk-Based Plan to Determine Audit Priorities

question 74

Multiple Choice

When developing an effective risk-based plan to determine audit priorities, an internal audit activity should start by:

• A) Identifying risks to the organization's operations.
• B) Observing and analyzing controls.
• C) Prioritizing known risks.
• D) Reviewing organizational objectives.

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Definitions:

Premium

An amount paid in addition to the standard cost or value, often for insurance, bonds, or the higher quality of a product or service.

Interest Rate

The fee, represented as a proportion of the principal, imposed by a lender on a borrower for utilizing assets.

Effective Interest Method

A method of calculating the amortized cost of a bond and the amount of interest expense over time by applying a constant interest rate to the carrying amount of the bond.

Interest Expense

The cost incurred by an entity for borrowed funds, often expressed as an annual percentage rate.