Which of the following would be the most appropriate next step for the auditor?

While conducting an engagement in the procurement department, the internal auditor noticed that the department head’s travel reports showed minor travel expenses, and there were no charges for hotels, meals, or transportation. However, the auditor knew that the department head frequently traveled worldwide to meet with suppliers and visit their production sites.

Which of the following would be the most appropriate next step for the auditor?
A . The auditor should make a note of the issue for follow-up when employee travel expenses are audited.
B . The auditor should analyze trends and changes among the organization’s suppliers over the past few years.
C . The auditor should investigate whether there are any special arrangements regarding senior management travel.
D . The auditor should analyze the list of destinations the department head visited to estimate typical costs.

View Answer

Answer: C

Explanation:

Given the unusual observation in the travel expenses reports, the most appropriate next step for the internal auditor is to investigate whether there are any special arrangements regarding senior management travel. This investigation could reveal explanations for the absence of typical travel-related expenses, such as pre-paid packages, special corporate arrangements, or even potentially unreported expenses, which could be critical for compliance and ethical standards.

Reference: Internal Auditing Standards on performing audit work and investigating anomalies.