Brant Water's internal audit function is scoping an assurance engagement over a new actuarial reserving model. No one on the team has actuarial expertise, and the chief audit executive cannot recruit a qualified actuary before the engagement must begin. What is the most appropriate way to proceed?
- AProceed with the engagement but narrow the scope to the general controls the team already understands, leaving the actuarial calculations untested this year.
- BObtain a written confirmation from management that the reserving model is accurate, then rely on that assertion in place of independent testing.
- CProcure the missing actuarial competency externally, for example through a guest auditor or an external specialist, so the function collectively has the skills the work requires. Correct
- DPostpone the engagement indefinitely until a suitably qualified actuary can be recruited as a permanent member of the internal audit staff.
Why A is wrong: Scoping around a competency gap is tempting because it lets the work start on time, but it leaves the very risk the engagement exists to examine unassessed and does not fulfil the mandate.
Why B is wrong: This looks efficient, but relying on the auditee's own assertion abandons independent assurance and adopts a first-line responsibility, which impairs objectivity.
Why C is correct: The Global Internal Audit Standards allow competencies to be developed or procured; bringing in a qualified specialist lets the function cover the model competently without impairing its independent role.
Why D is wrong: Permanent recruitment feels thorough, but the Standards permit procuring competencies, so an open-ended delay is unnecessary and leaves a material risk unaddressed.