During the development of a business case for a new application, the IS auditor should...

The best answer is D. Feasibility study.

ISACA guidance notes that, in projects, an auditor reviews the feasibility of projects based on resources, time, and other factors, and evaluates whether projects are aligned with the organization’s strategic goals. That is exactly the stage where internal audit’s advisory involvement is most appropriate during development of the business case.

Option A, B, and C occur later in the system development lifecycle and are more operational or project-delivery focused. The question is specifically about the development of a business case, and feasibility analysis is the phase most directly tied to whether the initiative is practical, justified, and aligned with business goals.

References (Official ISACA):

ISACA Journal, Innovation and the Auditor.

ISACA, An Appropriate Approach for Program and Project Management.