During an assurance engagement, an internal auditor discovered that a sales manager approved numerous sales contracts for values exceeding his authorization limit. The auditor reported the finding…

Question

Options

• AThe audit supervisor should include the new contracts in the finding for the final audit report.
• BThe audit supervisor should communicate the finding to the supervisor of the sales manager
• CThe audit supervisor should remind the sales manager of his authority limit for the contracts under
• DThe auditor should not reference the new contracts, because they are not yet signed and therefore

• A
  8% (5)
• B
  85% (50)
• C
  2% (1)
• D
  5% (3)

Explanation

According to the IIA guidance, the most appropriate next step when discovering a sales manager approving contracts beyond their authorization limit is to communicate the finding to the supervisor of the sales manager through an interim report. This approach ensures that the issue is addressed promptly and management can take immediate corrective actions to prevent further unauthorized activities. Including new contracts under negotiation in the final report would delay action, while reminding the sales manager of their authority limits does not escalate the issue

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