The Internal Audit Activity's Primary Responsibility in a Review or Examination

question 165

Multiple Choice

The internal audit activity's primary responsibility in a review or examination of the organization by an external regulatory body is to:

• A) Verify that regulatory reviews occur with adequate frequency.
• B) Provide follow-up to determine if the regulator's findings are appropriately resolved by management.
• C) Prepare documentation for the regulator.
• D) Document the responses to the regulator's findings.

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Definitions:

Sales Revenues

The income received by a company from its sales of goods or the provision of services.

Absorption Costing

This refers to an accounting strategy that comprehensively adds the costs of direct materials, direct labor, and both varying and fixed overheads into the total cost of manufacturing a product.

Variable Costing

A pricing approach that incorporates solely the variable production expenses—such as direct materials, direct labor, and variable manufacturing overhead—into the unit cost of a product.

Fixed Overhead

Expenses that remain constant regardless of the production or sales volume, including items like lease payments, wages, and insurance premiums.