Management Has Asked the Internal Audit Activity to Perform an Operational

question 93

Multiple Choice

Management has asked the internal audit activity to perform an operational audit of a division that recently reported an increase in expenditures in addition to a decrease in profits. However, existing internal audit resources are currently engaged in a legal compliance audit. Which factor would be considered least important in deciding whether resources should be removed from the legal compliance audit to the operational audit?

• A) The increase in expenditures at the division over the past year.
• B) The probability that the legal compliance audit will detect fraud.
• C) The results of the external auditor's most recent financial audit.
• D) The potential for regulatory fines associated with the legal compliance audit.

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Definitions:

Decision-Making Principles

Guidelines or criteria used to make choices among alternatives.

Determination of Parties

The process of identifying the entities or individuals involved in an agreement, conflict, or legal case.

Ethical Intensity

The magnitude of ethical concern perceived in a situation, influenced by factors like potential harm, social pressure, and probability of effect.

Vary Directly

A relationship where an increase in one variable corresponds with an increase in another variable.