When developing an effective risk-based plan to determine audit priorities, an internal audit activity should...

A risk-based internal audit plan must begin with the organization’s objectives because risks are meaningful only in relation to objectives. Internal audit needs to understand what the organization is trying to achieve before identifying events that could prevent achievement, delay achievement, or create unacceptable exposure. After objectives are understood, the audit activity can identify risks, assess their likelihood and impact, consider management’s risk responses, evaluate existing assurance coverage, and prioritize engagements. Option A is important but should follow the review of objectives. Option B is premature because controls cannot be evaluated effectively until the related objectives and risks are understood. Option C is also premature because risks cannot be prioritized before they are identified and linked to objectives. Therefore, the correct starting point for risk-based audit planning is Option D.