An Internal Auditor Has Been Asked to Participate in an Advisory

question 25

Multiple Choice

An internal auditor has been asked to participate in an advisory capacity to assist a committee in redesigning the organization's current financial reports to provide better information to management and the board. Which of the following actions on the part of the auditor would provide the greatest value to this project?

• A) The internal auditor has a set of generic report templates from a former project and presents them to the group because they worked so well for the previous employer.
• B) The internal auditor interviews each stakeholder and documents the requirements and preferences of each and creates a report template that meets as many of the requirements and preferences as possible.
• C) The internal auditor gathers the stakeholder group and holds a brainstorming session where they generate report requirements and preferences and then rank them in order of importance.
• D) The internal auditor undertakes a project to gather report templates and formats from other organizations in the same line of business and presents them all to the group for review.

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Definitions:

Cost Volume Profit Analysis

Cost volume profit analysis is a financial technique that examines the impact of changing levels of costs and volume on a company's profit, aiding in decision-making.

Production Volume

The total number of units of a product or service produced by a company in a specific period of time.

Total Contribution Margin

The overall difference between sales revenue and variable costs, indicating the amount available to cover fixed costs and generate profit.

Total Revenue

The overall amount of income generated by a business from its activities, such as sales of goods or services, before deducting expenses.