An Internal Auditor Is Testing the Controls of a Large

question 15

Multiple Choice

An internal auditor is testing the controls of a large and complex food production process where quality assurance is critical. Management provides process charts and documentation, but the auditor quickly determines that this information is incomplete and out of date. Which of the following would be the most appropriate course of action for the auditor to follow?

• A) Use the documentation but meet with the production supervisor to obtain updated information before proceeding.
• B) Amend the engagement objectives recognizing that important information is not available to protect the engagement's integrity.
• C) Defer the audit until management can provide updated charts and documentation as this is their responsibility.
• D) Use the documentation but use observation during the engagement to provide missing information.

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Definitions:

Generally Accepted Accounting Principles

Generally Accepted Accounting Principles (GAAP) are a set of rules and standards used for financial reporting that are adopted by most U.S. companies for preparing their financial statements.

Managerial Information

Data and reports specifically prepared for managers within an organization to aid in decision-making and strategic planning.

Company's Operation

The day-to-day activities involved in running a business, which can include production, marketing, and management functions.

Internal Stakeholders

Individuals or groups within an organization who are directly affected by its activities, such as employees, managers, and owners.