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:

Earnings Per Share

A financial metric calculated by dividing a company's net income by the number of its outstanding shares of common stock, indicating the amount of profit attributed to each share.

Operating Segment

An operating segment is a component of a company that engages in business activities from which it can earn revenues and incur expenses, and whose operating results are regularly reviewed by the company's management.

External Customers

Individuals or businesses outside of the company who purchase its products or services, as opposed to internal stakeholders.

Total Income

The aggregate amount of revenue and gains recognized by an entity within a specific period.