Certified Internal Auditor (CIA) Part 2: Practice of Internal Auditing — Question 286

An internal audit manager is planning a contract compliance audit. Which of the following should be done prior to developing the audit work program?

Answer options

• A. Select a sample of invoices for substantive testing.
• B. Review the contract for evidence of authorization.
• C. Document underlying reasons for noncompliance.
• D. Assess the inherent risk of paying duplicate invoices.

Correct answer: A

Explanation

Selecting a sample of invoices for substantive testing is essential as it allows the auditor to focus on specific transactions that can provide insights into compliance with contract terms. Reviewing the contract for evidence of authorization, documenting reasons for noncompliance, and assessing the risk of duplicate payments are important, but they should come after the initial sampling step to ensure that the audit program is effectively directed.