Internal audit confusion

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Kuldeep Singh (Querist)
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13 April 2017 Dear Experts,

Those who are damn sure about this question with exact 100% sure answer then reply. If you are not sure about

answer then do not reply/discuss. Actually this one of questions which comes in Recruitment of Manager (Account & Finance).
This question has become controversial and this question has gone to High court.

Qus) Which term defines internal audit with clarity ?

(1) Internal Audit is an evaluation and analysis of the financial statements conducted by the internal audit staff.

(2) Internal Audit is an evaluation and analysis of operation of business conducted by external audit staff only.

(3) Internal Audit is an evaluation and analysis of the business operation conducted by the internal audit staff.

(4) Internal audit is an evaluation and analysis of the financial ststements only conducted by the external agency.

CA Shubhanshu Jain

CA Shubhanshu Jain (Expert)
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13 April 2017 hiii

Internal audit is not only limited to evaluation and analysis of financial statements but it also includes analysis and evaluation of business operations which can be done either by internal audit staff, external audit staff or any external agency and it is also not compulsory that person doing internal audit is chartered accountant any other professional can also do internal audit if he has knowledge of business entity and its operations.

Kuldeep Singh

Kuldeep Singh (Querist)
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13 April 2017 Dear Expert, Please read question carefully and then reply. As per your statement, option 1,2,4 are correct .
So read again logic behind question, option 2 and 4 have word "ONLY". As per my view, option 1 will be the correct answer. So please suggest exact answer, i want to say one thing is that do not respond quickly because Experts reply are valuable for us.

CA Shubhanshu Jain

CA Shubhanshu Jain (Expert)
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13 April 2017 I have not answered on the basis of above options because these options are not complete in all aspect i have given answer on my own experience as i'm also an internal auditor in a company. So, internal auditor can be employee of the company or a CA Firm.

CA Shubhanshu Jain

CA Shubhanshu Jain (Expert)
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13 April 2017 and internal audit is not restricted to analysis of financial statements rather it focuses more on business operations like SOP (Statement of procedures) decided by company is followed or not in an organization.

Kuldeep Singh

Kuldeep Singh (Querist)
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13 April 2017 sir i want answer according to the question and in my view the first options define internal audit in comparision to other options because other options are not satisfactory . in second option the 'only' word make the defination wrong and third option is wrong stated and in forth option again carry 'only ' word ..... so please consider the question first and then answer it will help me out .

CA Shubhanshu Jain

CA Shubhanshu Jain (Expert)
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13 April 2017 If you have to go by options then Point No. 3 is more accurate

Kuldeep Singh

Kuldeep Singh (Querist)
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13 April 2017 sir firstly first option define more about internal audit because it covers financial statement also but in third option defination is conserve and partially complete as compared to first option ...

Kuldeep Singh

Kuldeep Singh (Querist)
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