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Question 267

During an audit of the accounts receivable (AR) process, an internal auditor noted that reconciliations are still not performed regularly by the AR staff, a recommendation that was made following a previous audit. Monitoring by the financial reporting function has failed to detect the shortcoming. Both the financial reporting function and AR report to the controller, who is responsible for implementing action plans. Which of the following supports the internal auditor's decision to combine both observations into one reported finding?

The observation was made during the same audit, and the action plan has a common owner.

The observation relates to the same control activity within a common process.

The observation has a common control, and it was noted in a prior audit.

The observation has a common process, and the action plan for the observation has a common owner.

Correct Answer: D

The observations have a common process involving both the accounts receivable and financial reporting functions. Since both functions report to the controller, who is responsible for the implementation of action plans, it is logical and efficient for the internal auditor to combine the observations into one finding with a common action plan and owner.

Discussion

htgOption: C

AR issue was found during the previous audit. Maybe that's why?

TicoOption: A

Why A is wrong? reconciliations by the AR staff and monitoring by the financial reporting functions are different processes so those observations shouldn't be combined. A is more reasonable.

John1237

A is false because it is stated that the observation was made during the same audit. Yet the following second observation was made during the recent audit: “Monitoring by the financial reporting function has failed to detect the shortcoming”.