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:

Resource Consumption

The act of using resources, such as materials, time, and energy, in the process of producing goods and services.

Activity-Based Costing

Activity-based costing is an accounting method that assigns costs to products and services based on the activities and resources that go into producing them.

Equipment Depreciation

The allocation of the cost of physical assets over its useful life, recognizing wear and tear over time.

Activity Cost Pools

Groupings of all costs associated with particular activities, which are then allocated to products or services based on their use of those activities.