Which of the following best describes a compliance audit engagement?

Comprehensive and Detailed Step-by-Step Explanation:

Reference to Compliance Auditing:

Definition: Compliance audits assess adherence to external laws, regulations, or internal policies and

procedures.

Standard 2130 - Control: Internal audit must evaluate the adequacy and effectiveness of controls to

ensure compliance with applicable laws and regulations.

Reasoning:

Option A is correct because assessing adherence to safety regulations is a compliance activity

focused on legal and regulatory conformity.

Option B (analyzing economic activity) relates more to financial auditing or accounting standards

compliance, not regulatory compliance.

Option C (reviewing an external service provider’s risk management process) aligns with a risk or

assurance engagement, not compliance.

Impact of Compliance Audits:

Ensuring adherence to legal requirements protects the organization from regulatory penalties and

enhances operational integrity.