ACCA Advanced Audit and Assurance (AAA) Practice Exam

What is the primary goal of an internal audit function?

1. To perform financial statement audits

2. To evaluate and enhance governance and risk management

3. To ensure compliance with industry regulations

4. To conduct fraud investigations

The correct answer is: To evaluate and enhance governance and risk management

The primary goal of an internal audit function is to evaluate and enhance governance and risk management. Internal auditing plays a critical role in helping an organization achieve its objectives by assessing the effectiveness of its governance processes, risk management procedures, and internal controls. This function provides independent assurance that risk management and control processes are operating effectively, ensuring that the organization can achieve its strategic goals. Internal audit functions are designed to help management and the board to understand and mitigate risks, leading to improved decision-making. By identifying areas for improvement in governance and risk management, the internal audit adds value to the organization and supports the ongoing development of its operations and strategic objectives. While performing financial statement audits, ensuring compliance with industry regulations, and conducting fraud investigations can be components of the internal audit role, they are not the primary objectives. These activities are often considered part of the broader governance and risk management framework that internal audits are designed to enhance.