Section: Volume C

A due diligence engagement is the most appropriate type of engagement for assessing the maturity and rigor of the organization-wide risk management process of a target entity that management is considering acquiring. Due diligence involves a comprehensive appraisal of a business undertaken by a prospective buyer, especially to establish its assets and liabilities and evaluate its commercial potential. It typically includes evaluating financials, operational processes, and risk management frameworks to ensure informed decision- making about the acquisition.References:
* The Institute of Internal Auditors (IIA), Practice Guide on Due Diligence
* "Mergers and Acquisitions: A Step-by-Step Legal and Practical Guide" by Edwin L. Miller, Jr.

The primary reason the CAE should actively network and build relationships with senior management and the board is to fulfill their responsibility to keep the board appropriately informed. This is crucial for ensuring that the board has a clear understanding of the risks, control issues, and internal audit findings that may impact the organization.
IIA References:
* IIA Standard 2060: Reporting to Senior Management and the Board requires the CAE to report periodically to senior management and the board on the internal audit activity's purpose, authority, responsibility, and performance relative to its plan. The CAE must also communicate significant risk exposures and control issues.
* The IIA Practice Guide on Effective Communication with Stakeholders highlights the importance of regular and effective communication between the CAE, senior management, and the board to ensure transparency and alignment on key issues.

Section: Volume C