Question

During an operational engagement, an internal auditor observes a large number of above-ground storage containers and a large amount of black emissions from a smokestack. The organization has an environmental safety department. The engagement is not designed to consider environmental concerns. The best course of action is to

A. Report the observations to the audit committee and seek their advice on whether the engagement should be expanded for the environmental audit.
B. Inquire of local management as to the use of the storage tanks to determine if they are properly classified as an asset. Do not take action on the environmental issues because the internal auditor is untrained in the area, and such action is the responsibility of an already existing department.
C. Document the observations and report them to the environmental safety department. Determine if their response will be timely, and follow-up to determine if they have taken timely action.
D. Make a note to consider environmental risk concerns when developing the engagement plan for the next year, but do not expand the scope of the existing engagement because the budget and risk priorities are already set.

Answer 1

During an operational engagement, the internal auditor should report any environmental concerns observed to the organization's environmental safety department and follow up on actions taken, even if the audit scope does not cover environmental issues.

Step-by-step explanation:

The question presented concerns the ethical and professional actions that an internal auditor should take upon noticing potential environmental risks during an operational engagement, even though the engagement scope does not cover environmental concerns.

The best course of action would be C. This option involves the auditor documenting the observations related to the above-ground storage containers and the black emissions and reporting these to the environmental safety department.