Certified Meeting Professional (CMP) Practice Exam

What type of audit is typically used for large projects with external funding?

1. Internal

2. External

3. Combined

4. Formal

The correct answer is: External

The type of audit that is typically used for large projects with external funding is indeed an external audit. External audits are conducted by independent auditors who are not affiliated with the organization being audited. This independence is crucial, especially in the context of large projects with external funding, as it provides stakeholders with an objective assessment of the project’s financial statements, compliance with relevant regulations, and the effectiveness of the overall management of funds. External audits help ensure transparency and accountability, which are vital for maintaining the trust of the funding sources, such as government agencies or private investors. They also provide confirmation that the project is on track financially and that expenditures are aligning with the planned budget. While internal audits are important for ongoing risk management and internal control assessments, they do not carry the same level of external validation that is often required for projects with external funding. A combined audit offers a mix of both internal and external perspectives, but it is the external audit that is specifically recognized for its role in projects involving external financial accountability. Formal audits can refer to different kinds of audits, but they do not specifically address the necessity for independence in auditing large projects with outside financial support.