Due to the Expanded Role of Internal Audit in the Organization

question 141

Multiple Choice

Due to the expanded role of internal audit in the organization, the chief audit executive (CAE) of a construction company decides to employ the services of an outsourced audit service provider to augment the internal audit staff. What does the CAE need to consider in determining whether the outsourced audit service provider possesses the necessary knowledge, skills and other competencies to perform an audit engagement?

• A) Specific matters expected to be covered in the engagement communications.
• B) The financial interest that the external service provider may have in the organization.
• C) The extent of other ongoing services the external service provider may be performing for the organization.
• D) The reputation of the external service provider.

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Definitions:

Spending Variances

Variances that arise when there is a difference between the actual amount spent on a particular item or activity and the budgeted or forecasted amount.

Customers Served

Refers to the number of clients or customers that a business has provided goods or services to during a specific period.

Flexible Budget

A financial plan that is modified based on fluctuations in volume or levels of activity.

Meals Served

The total number of individual portions or servings of food provided or sold, typically used in the context of catering or hospitality.