Which of the following is an example of criteria in an engagement communication?
A.
Annual business conduct training was not performed over the past two years due to inadequate operating budgets.
B.
The audit test was designed to evaluate compliance with the organization's policies and procedures related to business conduct and ethics.
C.
As a result of inadequate business conduct training, 16% of the executive team was unaware of their obligation to report potential conflicts of interest.
Comprehensive and Detailed Step-by-Step Explanation:
Reference to Criteria:
Definition: Criteria are the standards, policies, or benchmarks used to evaluate the subject matter during an audit.
IIA Standard 2410 - Criteria for Communicating: Audit reports should clearly state criteria to ensure findings are relevant and actionable.
Reasoning:
Option B is correct because it references the organization’s policies and procedures, which serve as the criteria for evaluating compliance.
Option A describes the condition (what was observed), not the criteria.
Option C describes the effect (the impact of the observed condition).
Importance of Criteria in Audit Reporting:
Including criteria provides a basis for comparison, helping stakeholders understand why a finding is significant and how it deviates from expectations.
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