Question

The chief operating officer (COO) has requested that the internal audit function advise her regarding a new incentive plan being developed for sales representatives. Which of the following tasks should the CAE decline with respect to providing advice to the COO?

1) Reviewing the proposed incentive plan to ensure it aligns with the company's strategic objectives
2) Assessing the potential risks and control weaknesses associated with the incentive plan
3) Providing recommendations for improving the design and implementation of the incentive plan
4) Assisting in the communication and training of sales representatives on the incentive plan

Answer 1

The Chief Audit Executive (CAE) should decline reviewing the proposed incentive plan, but should assess risks, provide recommendations, and assist in communication and training.

Step-by-step explanation:

The CAE should decline task 1) reviewing the proposed incentive plan to ensure it aligns with the company's strategic objectives. This task falls under the responsibility of the COO, as it relates to strategic decision-making. However, the CAE should perform tasks 2) assessing the potential risks and control weaknesses associated with the incentive plan, 3) providing recommendations for improving the design and implementation of the plan, and 4) assisting in the communication and training of sales representatives on the incentive plan. These tasks are within the scope of the internal audit function, as they involve assessing and improving controls and processes.