Narrative memoranda are used in internal auditing to describe processes in a clear and detailed manner, especially when the process is simple. This method is effective for documenting straightforward processes where a flowchart or other visual representation might be unnecessary or overly complex.
Detailed Explanation:
IIA Standard 2330 - Documenting Information:
This standard requires that internal auditors document relevant information to support engagement conclusions and recommendations. Narrative memoranda are one way to document processes, particularly when the process is simple and can be easily described in text.
Use of Narrative Memoranda:
Narrative memoranda provide a written account of a process, outlining each step in a sequential manner. This method is particularly useful for simple processes where the key points can be easily captured in a narrative form, without the need for complex diagrams.
Efficiency in Documentation:
For simple processes, a narrative memorandum is more efficient than a detailed flowchart. It allows the auditor to explain the process clearly and concisely, ensuring that all necessary information is captured without unnecessary detail.
Why Not Other Options?
Option A (Detailed risk assessment): A narrative memorandum is not typically used for risk assessments, which require more detailed analysis and often visual aids.
Option B (Identify key roles): While a narrative can mention roles, this is not its primary purpose.
Option D (Document outputs): Documenting outputs that support other activities typically requires more detailed mapping, such as flowcharts or tables.
Conclusion: Option C is correct because narrative memoranda are best suited for explaining simple processes in a clear and concise manner, in line with IIA documentation standards.