IIA-CIA-PART2 · Question #183
An internal audit manager is planning a contract compliance audit Which of the following should be done prior to developing the audit work program?
The correct answer is B. Review the contract for evidence of authorization. Before developing the audit work program, it is essential to review the contract for evidence of authorization. This step ensures that the contract is valid and approved by the appropriate parties, forming a critical basis for the compliance audit. By confirming authorization…
Question
An internal audit manager is planning a contract compliance audit Which of the following should be done prior to developing the audit work program?
Options
- ASelect a sample of invoices for substantive testing
- BReview the contract for evidence of authorization
- CDocument underlying reasons for noncompliance
- DAssess the inherent risk of paying duplicate invoices
How the community answered
(57 responses)- A4% (2)
- B74% (42)
- C16% (9)
- D7% (4)
Explanation
Before developing the audit work program, it is essential to review the contract for evidence of authorization. This step ensures that the contract is valid and approved by the appropriate parties, forming a critical basis for the compliance audit. By confirming authorization, the auditor can ascertain that the contract is legitimate and enforceable, and understand its key terms and conditions, which is necessary for planning and executing the audit effectively. Other steps, such as selecting a sample or assessing risks, are important but should follow after understanding the contract's validity and scope.
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