Casualty Actuarial Society (CAS) Practice Exam

Which of the following factors is NOT typically considered when deciding to conduct a field audit?

1. Geographical factors

2. Prior audit experience

3. Company profit margins

4. Cost of auditing

The correct answer is: Company profit margins

When determining whether to conduct a field audit, several factors are evaluated to assess the necessity and feasibility of the audit. Company profit margins are generally not a typical consideration in this context. This decision-making process primarily focuses on aspects that directly influence the effectiveness and efficiency of the audit itself. Geographical factors can play a role in evaluating the logistics and accessibility of an audit site, while prior audit experience is crucial for understanding past findings and tailoring the audit approach. The cost of auditing is also a significant consideration, as it impacts the overall budget and resource allocation for the audit process. In contrast, company profit margins, while important for overall business performance analysis, do not directly influence the decision to undertake an audit. Audits are generally determined by regulatory requirements, risk assessment, and the need for financial oversight rather than the company’s profitability. Thus, profit margins are not a standard factor in the decision-making process for scheduling field audits.