Question

The policy of some organizations is to have engagement clients respond to engagement communications by writing to an administrative Vice President who has the primary responsibility for follow-up. Under such arrangements, copies of responses are usually sent to the internal audit activity, which reviews them for adequacy. If the internal audit activity considers the response to the particular report inadequate, which of the following is the most appropriate course of action?

1) schedule a follow-up engagement within 6 months
2) follow up in connection with the next regularly scheduled engagement to review the engagement client
3) perform a follow-up engagement immediately
4) inform the administrative Vice President that the response is not considered adequate, and coordinate any additional follow-up with the vice president

Answer 1

The best action when an internal audit activity deems a response inadequate is to inform the administrative Vice President and coordinate further follow-up with them, as part of effective corporate governance and oversight. The correct option is 4)

Step-by-step explanation:

If the internal audit activity considers the response to the particular report inadequate, the most appropriate course of action is to inform the administrative Vice President that the response is not considered adequate, and coordinate any additional follow-up with the vice president. This encourages direct communication and allows the issues to be addressed efficiently with the involvement of top management who hold a higher degree of responsibility. This approach is part of effective corporate governance, which relies on robust oversight mechanisms involving the board of directors, auditing firms, and responsive management practices to ensure proper organizational function and accountability.