What Role, If Any, Should the Internal Audit Activity Have

question 310

Multiple Choice

What role, if any, should the internal audit activity have in the process of following up on observations and recommendations made by the external auditors?

• A) The internal audit activity should have no role in this process in order to ensure independence.
• B) The internal audit activity should become involved only if the chief audit executive has sufficient evidence that the follow-up is not occurring.
• C) The internal audit activity should review the adequacy and effectiveness of management's follow-up actions.
• D) The internal audit activity should become involved only if specifically requested by management or the board of directors.

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Definitions:

Activity Cost Pool

A “bucket” in which costs are accumulated that relate to a single activity measure in an activity-based costing system.

Measure Of Activity

A metric used to gauge the level of a specific operation or process over a given time period.

Activity Rate

A rate used to allocate indirect costs to products or services, based on a specific activity or driver.

Product Design

The process of creating, defining, and managing the specifications of a physical product or its system to solve a particular problem.