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What action should the internal auditor take if cycle count adjustments seem excessive in a specific department?
Interview management and apply engagement procedures
Cease further work as no consent was identified
Report the suspicion of fraud to internal auditing management
Document for review during the next engagement
The correct answer is: Interview management and apply engagement procedures
When faced with excessive cycle count adjustments in a specific department, the internal auditor should take the action of interviewing management and applying engagement procedures. This approach is vital because it allows the auditor to gather more information and understand the underlying reasons for the adjustments. Engaging with management can help to determine whether the adjustments are justified based on legitimate factors such as inventory discrepancies, process inefficiencies, or other operational issues. This preliminary inquiry is critical as it provides context before conducting more formal testing or investigation. By applying engagement procedures, the auditor can assess the adequacy and effectiveness of the current processes related to inventory management and identify any potential areas for improvement. This proactive approach ensures that the audit process is thorough and that any significant issues are addressed in a timely manner. It also aligns with the internal auditor's role in providing reassurance to stakeholders regarding the integrity and accuracy of financial information, rather than jumping to conclusions without sufficient evidence. In doing so, it helps to maintain a constructive relationship with the management of the department while effectively fulfilling the auditor's responsibilities.