An Internal Audit Activity Has Made a Preliminary Determination That

question 141

Multiple Choice

An internal audit activity has made a preliminary determination that a division of the organization has employed improper accounting practices. Upon being informed, the head of the organization instructs the chief audit executive (CAE) to cease the investigation and to withhold the information from external auditors. Which course of action should the CAE follow?

• A) Report the communication to the organization's general counsel.
• B) Report the instruction to the chairperson of the audit committee.
• C) Inform the head of the organization that the investigation will continue as planned.
• D) Inform the external auditors of the findings and the mandate to stop investigating.

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Definitions:

Process Cost Accounting

Process cost accounting is a method used to allocate production costs to units of output in continuous or repetitive manufacturing processes.

Materials Account

The materials account is used in accounting to track the cost of raw materials that are either in stock or used during the manufacturing process.

Lean Manufacturing

A systematic method for waste minimization within a manufacturing system without sacrificing productivity, aiming to produce more value for customers with fewer resources.

High Quality

A characteristic of products or services that meet or exceed customer expectations or industry standards.