A chief audit executive (CAE) was asked to participate in the selection of an external auditor. Which of the following would not be a typical responsibility for the CAE?
A.
Evaluate the proposed external auditor fee.
B.
Recommend criteria to be used in the selection process.
This responsibility usually falls under the purview of management or a dedicated performance evaluation team. The CAE’s role is more aligned with auditing and evaluating existing processes rather than developing performance metrics.
This question got me too but I think I understand the answer this way:
They're always pushing the idea the CAE can advise the Board (audit committee specifically) to select a good external auditor, but it's the Board's responsibility to make sure the external auditor actually performs.
The test sort of assumes at times that all auditors are interchangeable and know each other's industry equally well, so A and B are obviously not the answer from the perspective of those are giving advice.
I first thought the answer might be "D" because that comes later. Internal audit does monitor the work of the external auditor, but that doesn't happen while you're selecting the external auditor. It's really not a very good answer it seems like it should also count as "correct" because it's nonsense in the context of the question. But that is something the CAE does do, so I guess that's why they consider C to be a better answer.
But "C" is the correct response because the Board should be evaluating the external auditor and not the CAE. Also isn't that a conflict of interest for the internal auditor to develop evaluation criteria for the external auditor? The test never likes it when party A does party B's job.
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