During the second half of the audit year, the chief audit executive (CAE) identified significant negative variances to the approved audit budget required to complete the internal audit plan. Which of the following actions should the CAE take?
A.
Revise the internal audit plan to reduce coverage of new strategic critical areas so that the approved budget can be met
B.
Reduce the scope of the remainder of the engagements in the internal audit plan to reduce overall costs
C.
Communicate to senior management and the board the risk of not being able to complete the audit plan
D.
Continue to complete the plan regardless of the budget variances, as the audit function is invaluable to sound corporate governance
The CAE must ensure transparency with stakeholders when there are significant budget or resource limitations that may prevent completion of the audit plan. Communicating the risk of incomplete coverage to senior management and the board allows them to make informed decisions, such as adjusting the budget or revising the plan.
Options A and B are inappropriate because reducing coverage or scope without board approval undermines risk-based planning. Option D is not feasible since resources are limited.
[Reference:, IIA Standards – Standard 2020: Communication and Approval; Standard 2060: Reporting to Senior Management and the Board., ]
Contribute your Thoughts:
Chosen Answer:
This is a voting comment (?). You can switch to a simple comment. It is better to Upvote an existing comment if you don't have anything to add.
Submit