While testing the effectiveness of inventory controls, the internal auditor makes a note in the working papers that most of the inventory count adjustments for the facility involved transactions of the machining department. The machining department also had generated an extraordinary number of inventory count adjustments in comparison with other departments last year. The internal auditor should …

Question

Accepted Answer

interview management and apply other engagement procedures to determine whether transaction controls and procedures within the machining department are adequate.

Answer

do no further work because the concern was not identified by the analytical procedures included in the engagement work programme.

Answer

notify the chief audit executive (CAE) that fraud is suspected.

Answer

place a note in the working papers to review this matter in detail during the next engagement.

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While testing the effectiveness of inventory controls, the internal auditor make...

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