Question

The internal auditor for ABC Corporation has received a special request from management. The internal auditor believes that the objectives that should be pursued go beyond those requested by management. What should the internal auditor do?

A. Try to persuade management to include the additional objectives in the consulting engagement.
B. Document the fact that the objectives were not pursued and disclose that observation to the audit committee in a formal report.
C. Refuse to accept the engagement unless management can be persuaded to include the additional objectives in the consulting engagement.
D. Include the objectives that are necessary in the current consulting engagement and inform management in the final communication of the engagement results.

Answer 1

The internal auditor should try to persuade management to incorporate the additional objectives. If unsuccessful, they should document the communication and, if necessary, report the limitation in scope to the audit committee.

Step-by-step explanation:

The internal auditor for ABC Corporation should approach this situation professionally, following the standards and best practices of the auditing profession. Option A seems to be the best course of action, which is to try to persuade management to include the additional objectives in the consulting engagement.

This attempts to ensure all pertinent issues are addressed. If management is unwilling to expand the scope, the auditor should proceed with the engagement, provided that doing so complies with professional ethical standards.

However, it is also important to document all communication with management regarding the engagement's scope, including any areas the auditor feels are necessary to include but were not approved by management.

This documentation can be useful if there are future questions concerning the engagement's scope. Depending on the significance of the additional objectives, it may be appropriate to disclose the limitation in scope to the audit committee, especially if it could affect the reliability of the audit findings.