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When deciding on the role of the IA department in undertaking operational audits, which TWO of the following should the team NOT be involved in?
(1) Observing procedures carried out by Sistar Co’s staff
(2) Reperforming procedures documented in procedures manuals
(3) Designing and implementing internal control procedures to address deficiencies
(4) Reporting findings directly to the board of directors
(5) Authorising transactions and performing reconciliations
Answer is (3 and 5).
Can you tell me why 4th is correct? I have studied that Internal audit should report to audit committee and then audit committee should report to BOD. Here, it says report directly to BOD and it is fine to do this.
Please share where I am lacking.Direct access to the audit committee (where there is one) is an indication of the independence of the IA function. But that does not PRECLUDE IA from reporting matters directly to the board. Indeed, if IA were to find weaknesses in financial internal controls, the first place you would expect them to report is to management/the board.
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