Which audit type is described as an independent and objective assurance activity designed to add value and improve organisational operations?

Which audit type is described as an independent and objective assurance activity designed to add value and improve organisational operations?

• A. Compliance audits
• B. Internal auditing
• C. Transaction audits
• D. Risk-based audits

Answer: (B)

This item tests internal auditing. Internal auditing is an independent and objective assurance activity that provides value by evaluating and improving governance, risk management, and control processes, with the aim of enhancing organisational operations. Because it operates independently of day-to-day management and reports to the board or audit committee, it can assess the effectiveness of controls and risk management without being influenced by line management, which is essential for objectivity. This makes it different from compliance audits, which focus on whether activities comply with laws, policies, or regulations; transaction audits, which scrutinize specific transactions; and the risk-based audit approach, which is a method used within internal audit to prioritise work but doesn’t by itself define the activity.

This item tests internal auditing. Internal auditing is an independent and objective assurance activity that provides value by evaluating and improving governance, risk management, and control processes, with the aim of enhancing organisational operations. Because it operates independently of day-to-day management and reports to the board or audit committee, it can assess the effectiveness of controls and risk management without being influenced by line management, which is essential for objectivity. This makes it different from compliance audits, which focus on whether activities comply with laws, policies, or regulations; transaction audits, which scrutinize specific transactions; and the risk-based audit approach, which is a method used within internal audit to prioritise work but doesn’t by itself define the activity.