Question

If internal audit resources are limited to conducting only one audit at a divisional location, should a high-risk process that was audited last year at this location be audited in lieu of a moderately risky process that was last audited four years ago? Explain.

Answer 1

Internal audit is the audit of the controls lying in the entity. Internal audit is done on regular basis. The internal audit review the various aspects of the processes and assess the end for the internal audit.

While conducting the internal audit the auditor should assess the following factors to identify the need for internal audit:

• The risk factors involved in the various activities of the entity.
• The various laws and regulations followed by the entity.
• The efficiency of the operations.
• Controls exists in the organization.

Therefore an auditor should assess the above factors before deciding the internal audit of an entity's processes.

In case where internal audit can be conducted only one audit and the entity has a high risk process audited last year and the moderately risk process audited four years ago. The auditor should keep in mind the above mentioned factors. And then the auditor should decide whether the audit of which factor should be considered. The involvemeyof the factors in the production or sale should also be analyzed.