Which of the following best describes a compliance audit engagement?
A.
The auditor reviews controls of the oil shale mining process to assess adherence to safety regulations established by local authorities.
B.
The auditor analyzes the economic activity of the organization as measured and reported using international accounting standards.
C.
The auditor conducts a review to provide assurance that the external service provider of maintenance for the organization has an effective risk management process.
Comprehensive and Detailed Step-by-Step Explanation:
Reference to Compliance Auditing:
Definition: Compliance audits assess adherence to external laws, regulations, or internal policies and procedures.
Standard 2130 - Control: Internal audit must evaluate the adequacy and effectiveness of controls to ensure compliance with applicable laws and regulations.
Reasoning:
Option A is correct because assessing adherence to safety regulations is a compliance activity focused on legal and regulatory conformity.
Option B (analyzing economic activity) relates more to financial auditing or accounting standards compliance, not regulatory compliance.
Option C (reviewing an external service provider’s risk management process) aligns with a risk or assurance engagement, not compliance.
Impact of Compliance Audits:
Ensuring adherence to legal requirements protects the organization from regulatory penalties and enhances operational integrity.
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