An internal auditor is planning to audit the organization's payroll function, which was recently outsourced. Which of the following is the most appropriate first step for the auditor?

Question

Options

• AReview management's organ nationwide risk assessment
• BUnderstand the objectives and strategies of the new arrangement
• CRevise the scope of the audit engagement
• DForm objectives for the audit engagement

• A
  10% (5)
• B
  82% (40)
• C
  6% (3)
• D
  2% (1)

Explanation

When planning to audit an outsourced function, the most appropriate first step for an internal auditor is to understand the objectives and strategies of the new arrangement. This step is crucial because it sets the foundation for the entire audit process. By understanding the objectives and strategies, the auditor gains insights into the rationale behind the outsourcing decision, the expected outcomes, and how these align with the organization's overall goals. This understanding helps in identifying key risks, establishing relevant audit criteria, and tailoring the audit scope and procedures accordingly. Without this initial step, the auditor may miss critical aspects of the outsourced arrangement, leading to an incomplete or ineffective audit.

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