External Audit – Knowsia

PSAF – L2 – Q15.4 – Public Financial Management Audit

Discuss four responsibilities of the Internal Audit Agency and Audit Service in public financial management.

Question

(a) Internal audit and external audit functions are critical to ensuring effective management of public resources. While the two functions lie in two separate organizations, both can co-operate and co-ordinate their functions in a manner that will promote value for money in the auditing space.

Required:

(a) Discuss four responsibilities of the:

(i) Internal Audit Agency; and

(ii) Audit Service.

(b) Explain four ways that the two institutions in question (a) can co-operate to ensure effective audit in the public sector.

Answer

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Tags: Accountability, Audit Coordination, Audit Service, External Audit, Governance, Internal Audit, Internal Audit Agency, Public Financial Management
Level: Level 2

Topic: The context of public financial management

FM – L2 – Q3.3 – Public expenditure and financial accountability framework

Name and explain objects of enactments for external and internal audit in public sector.

Question

Audit is a very important vehicle for accountability in the public sector. Therefore, appropriate enactment is made to govern and regulate external audit and internal audit in the public sector of the Republic of Takoradi.

Required:

(a) Name and explain the objects of the two enactments that govern and regulate external audit and internal audit in the public sector respectively.

(b) Discuss four responsibilities each of the following institutions under the respective enactments:

(I) Audit Service.

(ii) Internal Audit Agency.

Answer

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Tags: Audit, External Audit, Internal Audit, Legislation, Takoradi
Level: Level 2

Topic: Public expenditure and financial accountability framework

AA – L2 – Q57 – Internal Audits

Explain the usefulness of internal audit work, quality factors, and audit evidence for outsourced functions at SkyHigh Airlines.

Question

SkyHigh Airlines is an airline. The company owns some of its fleet of aircraft. Other aircraft are leased from third parties. SkyHigh Airlines has an internal audit function that has recently expanded. Your firm is the external auditor to SkyHigh Airlines. Your firm has been asked to investigate the extent to which it may be able to rely on the work of internal Angelfire International

Required:

(a) Explain why the work of internal auditors, in the three areas noted above, is likely to be useful to you as the external auditor. (9 marks)

(b) Explain how the quality of the internal audit function is likely to influence the extent of your reliance on internal audit work. (5 marks)

(c) Describe the audit evidence you will seek relating to internal controls over the outsourced functions (in-flight catering and payroll). (6 marks)

Answer

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Tags: Audit Evidence, Audit Procedures, External Audit, Financial Statement Assertions, Internal Audit, Internal controls, Outsourcing
Level: Level 2

Topic: Internal Audits

AAA – L3 – Q41 – Internal and External Audit

Explain differences between internal and external audit and discuss outsourcing internal audit to external auditors.

Question

Required
(a) Explain the difference between the internal and external audit functions.
(b) List the advantages and disadvantages of a company outsourcing its internal audit function to its external auditors.

Answer

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Tags: Audit functions, External Audit, Internal Audit, Outsourcing, Professional responsibilities
Level: Level 3

Topic: Internal Audit and Outsourcing

AA – L2 – Q25 – Internal vs External Auditors

Contrast the roles of internal and external auditors, focusing on objectives, reporting, scope, and relationship with the company. Discuss the benefits of forming an audit committee for Apex Ltd, a private company with financial reporting and control challenges.

Question

(a) Contrast the role of internal and external auditors.

(b) Apex Ltd designs and manufactures luxury motor vehicles. The company employs 2,500 staff and consistently makes a net profit of between 10% and 15% of revenue. Apex Ltd is not listed; its shares are held by 15 individuals, most of them from the same family. The maximum shareholding is 15% of the share capital.

The executive directors are drawn mainly from the shareholders. There are no non-executive directors because the company legislation in Apex Ltd’s jurisdiction does not require any. The executive directors are very successful in running Apex Ltd, partly from their training in production and management techniques, and partly from their ‘hands-on’ approach providing motivation to employees.

The board are considering a significant expansion of the company. However, the company’s bankers are concerned with the standard of financial reporting as the financial director (FD) has recently left Apex Ltd. The board are delaying provision of additional financial information until a new FD is appointed.

Apex Ltd does have an internal audit function, although the chief internal auditor frequently comments that the board of Apex Ltd do not understand his reports or provide sufficient support for his department or the system of internal control within Apex Ltd. The board of Apex Ltd concur with this view. Barnes & Co, the external auditors, have also expressed concern in this area and the fact that the internal audit function focuses work on systems of internal control, not financial reporting. Barnes & Co are appointed by and report to the board of Apex Ltd.

The board of Apex Ltd are considering a proposal from the chief internal auditor to establish an audit committee. The committee would consist of one executive director, the chief internal auditor as well as three new appointees. One appointee would have a non-executive seat on the board of directors.

Required:
Discuss the benefits to Apex Ltd of forming an audit committee.

Answer

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Tags: Audit Objectives, Auditor Roles, External Audit, Independence, Internal Audit, Reporting
Level: Level 2

Topic: Corporate Governance and Audit Committees

AA – L2 – Q2 – The Role and Responsibilities of Auditors

Explain the purpose and role of external audit in large companies for training materials.

Question

The purpose of an external audit and its role are not well understood. You have been asked to write some material for inclusion of your firm’s training materials dealing with these issues in the audit of large companies.

Required:

(a) Draft an explanation dealing with the purpose of an external audit and its role in the audit of large companies, for the inclusion in your firm’s training materials.

(b) The external audit process for the audit of large entities generally involves two or more recognizable stages. One stage involves understanding the business and risk assessment, determining the response to assessed risk, testing of controls as the interim audit. Another stage involves further tests of controls and substantive procedures and audit finalisation procedures. This stage is sometimes known as the final audit.

Describe and explain the main audit procedures and processes that take place during the interim and final audit of a large entity.

Answer

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Tags: Auditor Responsibilities, External Audit, Financial Statements, Public Interest, Stewardship
Level: Level 2

Topic: The Role and Responsibilities of Auditors

Tag (SQ): External Audit

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PSAF – L2 – Q15.4 – Public Financial Management Audit

Discuss four responsibilities of the Internal Audit Agency and Audit Service in public financial management.

FM – L2 – Q3.3 – Public expenditure and financial accountability framework

Name and explain objects of enactments for external and internal audit in public sector.

AA – L2 – Q57 – Internal Audits

Explain the usefulness of internal audit work, quality factors, and audit evidence for outsourced functions at SkyHigh Airlines.

AAA – L3 – Q41 – Internal and External Audit

Explain differences between internal and external audit and discuss outsourcing internal audit to external auditors.

AA – L2 – Q25 – Internal vs External Auditors

Contrast the roles of internal and external auditors, focusing on objectives, reporting, scope, and relationship with the company. Discuss the benefits of forming an audit committee for Apex Ltd, a private company with financial reporting and control challenges.

AA – L2 – Q2 – The Role and Responsibilities of Auditors

Explain the purpose and role of external audit in large companies for training materials.

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Tag (SQ): External Audit

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PSAF – L2 – Q15.4 – Public Financial Management Audit

Discuss four responsibilities of the Internal Audit Agency and Audit Service in public financial management.

You're reporting an error for "PSAF – L2 – Q15.4 – Public Financial Management Audit"

FM – L2 – Q3.3 – Public expenditure and financial accountability framework

Name and explain objects of enactments for external and internal audit in public sector.

You're reporting an error for "FM – L2 – Q3.3 – Public expenditure and financial accountability framework"

AA – L2 – Q57 – Internal Audits

Explain the usefulness of internal audit work, quality factors, and audit evidence for outsourced functions at SkyHigh Airlines.

You're reporting an error for "AA – L2 – Q57 – Internal Audits"

AAA – L3 – Q41 – Internal and External Audit

Explain differences between internal and external audit and discuss outsourcing internal audit to external auditors.

You're reporting an error for "AAA – L3 – Q41 – Internal and External Audit"

AA – L2 – Q25 – Internal vs External Auditors

Contrast the roles of internal and external auditors, focusing on objectives, reporting, scope, and relationship with the company. Discuss the benefits of forming an audit committee for Apex Ltd, a private company with financial reporting and control challenges.

You're reporting an error for "AA – L2 – Q25 – Internal vs External Auditors"

AA – L2 – Q2 – The Role and Responsibilities of Auditors

Explain the purpose and role of external audit in large companies for training materials.

You're reporting an error for "AA – L2 – Q2 – The Role and Responsibilities of Auditors"

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