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:

Stockholder Investments

Funds or assets that shareholders provide to a corporation in exchange for ownership interest.

Equity

Equity represents the ownership value held in an asset or a business by its shareholders or owners, calculated as the difference between the value of the assets and the value of the liabilities.

Net Income

The total earnings of a company after subtracting all expenses, including taxes, from its total revenues.

Investing Activities

Transactions and events related to the acquisition and disposal of long-term assets and other investments not included in cash equivalents.