Question

1 Which of the following statement is true regarding the differences between internal and external audits?

Select one: a. External audit’s scope is broader than but includes that of the internal audit’s scope. b. External audit function reports to board of directors, internal audit function reports to CAE. c. External audit benefits management, internal audit benefits the third party in the areas of governance, risk and controls. d. External audit’s purpose is to express an opinion on financial statements. Internal audit’s purpose is to enhance organization’s value through assurance and consulting on areas of governance, risk and controls.

2. XYZ Company’s new CFO has asked the company’s CAE to meet with him to discuss the role of the internal audit function. The CAE should inform the CFO that the overall responsibility of internal auditing is to:

Select one: a. Review the integrity of financial and operating information and the methods used to accumulate and report information b. Assess the company’s methods for safeguarding its assets and, as appropriate, verify the existence of the assets c. Serve as an independent assurance and consulting activity designed to add value and improve the company’s operations d. Determine whether the company’s system of internal controls provides reasonable assurance that information is effectively and efficiently communicated to management

Answer 1

1)

d. External audit’s purpose is to express an opinion on financial statements. Internal audit’s purpose is to enhance organization’s value through assurance and consulting on areas of governance, risk and controls.

Explanation:

Option (a) is not Correct : Extending far beyond just the sphere of financial and compliance controls, internal audit exists to evaluate the organization’s entire risk and control landscape, risk management effectiveness, and ramifications for organizational strategy and performance.

Option (b) is not Correct : External Audit reports to Investors, Shareholders, Regulators.

Opttion (c) is not Correct : External audit benifits Investors, Shareholders, Regulators.

2)

(a)  Review the integrity of financial and operating information and the methods used to accumulate and report information

Explanation:

(b) Safeguarging and vefifying the existance of Assets is the responsibility of management

(C) Internal audit team does not function independently

(d) Internal audit is nowhere connected with effective communication