An audit client responded to recommendations from a recent consulting engagement. The client indicated that several recommended process improvements would not be implemented. Which of the following…

Question

Options

• AEscalate the unresolved issues to the board, because they could pose significant risk exposures to
• BConfirm the decision with management and document this decision in the audit file.
• CDocument the issue in the audit file and follow up until the issues are resolved.
• DInitiate an assurance engagement on the unresolved issues.

• A
  5% (1)
• B
  76% (16)
• C
  5% (1)
• D
  14% (3)

Explanation

When a client decides not to implement recommended process improvements from a consulting engagement, the internal audit activity should confirm the decision with management and document it in the audit file. This approach ensures that the audit trail is complete and that there is a record of management's acceptance of the associated risks. Escalating the issue to the board (Option A) or initiating an assurance engagement (Option D) might be necessary if the risks are significant, but these actions are not the immediate next steps. Continuous follow-up (Option C) is more relevant to assurance engagements rather than consulting engagements.

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