Question

Internal auditors realize that at times corrective action is not taken when agreed to by the appropriate parties. Thus, in an assurance engagement, internal auditors should?

1) write a follow-up engagement communication with all observations and recommendations and their significance to the operations
2) decide to conduct follow-up work only if management requests the internal auditor's assistance
3) decide the extent necessary of follow-up work
4) allow management to decide when to follow up because follow-up is management's ultimate responsibility

Answer 1

In an assurance engagement, internal auditors should write a follow-up engagement communication with all observations and recommendations and their significance to the operations.

Step-by-step explanation:

In an assurance engagement, internal auditors should write a follow-up engagement communication with all observations and recommendations and their significance to the operations. This is because the purpose of an assurance engagement is to provide an independent and objective evaluation of an organization's operations and to provide recommendations for improvement. By documenting all observations and recommendations, internal auditors ensure that the appropriate parties are aware of the issues and the necessary corrective action that needs to be taken.

Deciding to conduct follow-up work only if management requests it (option 2) or allowing management to decide when to follow up (option 4) may not be effective because there is a risk that corrective action may not be taken or may be delayed. Internal auditors have a responsibility to ensure that appropriate corrective action is taken to address any identified issues.

Deciding the extent necessary of follow-up work (option 3) is also an important consideration for internal auditors. They should determine the extent of follow-up work based on the significance of the issues identified and the impact they have on the operations.