Internal Audit

Question 1

what is an internal audit

Answer 1

a monitoring activity established by entity as service to entity .

examining, evaluating and reporting to management effectiveness of I.C

Question 2

example of Internal audit

Answer 2

• risk evaluation
• law/regulation compliance
• financial and operating reliability

Question 3

Dependency and requirement

Answer 3

I.A not required but best practice of corporate governance

-I.A depends on no. of employees, scale and diversity, complexity, current control envrionment

Question 4

Limitations of Internal Audit Function

Answer 4

Questions Over:
Independance
Reporting responsibility
knowledge/expertise
scope not defined by statute
length of service
work load

Question 5

outsouring I.A Function Advantages

Answer 5

• independence & Objectivity *
• specialist skills
• Immediate start/ time scale
• cost reduction training

Question 6

Outsourcing I.A Function Disadvantages

Answer 6

• limited company knowledge

- confidentiality

Question 7

Internal V External Audit Definitive (6)

Answer 7

1. objective
2. reporting to
3. appointed/ removed
4. relationship
5. scope
6. qualifications

Question 8

1. objective

Answer 8

I = whatever required
E= opinion of truth and fairness

Question 9

2. reporting to

Answer 9

I = management/ governance
E= shareholders

Question 10

3. Appointed/Removed

Answer 10

I = audit committee / board
E = shareholders

Question 11

4. Relationship

Answer 11

I= employees 
E= independant

Question 12

5. Scope

Answer 12

I= relates to operations of company 
E= relates to Financial Statements

Question 13

6. Qualifications

Answer 13

I = N/A
E= Required