The External Auditor Has Identified a Number of Production Process

question 440

Multiple Choice

The external auditor has identified a number of production process control deficiencies involving several departments. As a result, senior management has asked the internal audit activity to complete internal control training for all related staff. According to IIA guidance, which of the following would be the most appropriate course of action for the chief audit executive to follow?

• A) Refuse to accept the consulting engagement because it would be a violation of independence.
• B) Collaborate with the external auditor to ensure the most efficient use of resources.
• C) Accept the engagement but hire an external training specialist to provide the necessary expertise.
• D) Accept the engagement even if the audit engagement staff was previously responsible for operational areas being trained.

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Definitions:

Securities Exchange Commission

The Securities and Exchange Commission (SEC) is a U.S. federal agency responsible for regulating the securities industry, enforcing federal securities laws, and ensuring public companies disclose their financial information.

Criminal Prosecution

The process whereby the state brings charges against an individual or entity for violating criminal law.

Reasonable Doubt

The standard of proof required in criminal cases for a jury or judge to legally find the defendant guilty; doubt based on reason and common sense.

Securities Laws

Securities laws are legislations and regulations designed to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation, governing the creation and trading of securities.