The Chief Audit Executive (CAE) Has Been Asked to Manage

question 276

Multiple Choice

The chief audit executive (CAE) has been asked to manage the regulatory compliance function for the organization's retail store operations. Store operations are included in the annual audit plan. Which of the following strategies best fulfills the requirements of the Standards regarding these audits?

• A) The scope of store operations audits should exclude compliance.
• B) Store operations audits can be fully executed with appropriate disclosure to the board.
• C) Store operations audits should be performed by an external service provider.
• D) A store operations compliance audit should be performed by a staff internal auditor under the direction of the CAE.

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Definitions:

Damaged Goods

Items that are broken, defective, or impaired in some way, which typically reduce their value or usefulness.

Period-End Inventory

The total value of all inventory still available for sale by a company at the end of an accounting period.

Gross Profit

Gross profit is the difference between the sales revenue and the cost of goods sold, illustrating how much a company earns from selling its products before other expenses are deducted.

Cost Of Goods Available

The total cost of merchandise a company has for sale, which includes the beginning inventory plus the cost of goods purchased minus ending inventory.