Question

In: Accounting

Effective internal control for purchases generally can be achieved in a well-planned organizational structure with a...

Effective internal control for purchases generally can be achieved in a well-planned organizational
structure with a separate purchasing department that has:

A direct reporting responsibility to the controller of the organization.

B.The responsibility of reviewing purchase orders issued by user departments.

C. The ability to prepare payment vouchers based on the information on a vendor’s invoice.

D. The authority to make purchases of requisitioned materials and services.

The authority of the internal audit function is limited to that granted by:

Group of answer choices

a. The board and the controller.

b.The board and the chief financial officer.

c. Senior management and the Standards.

d. Management and the board.

An internal auditor who encounters an ethical dilemma not explicitly addressed by The IIA’s Code of
Ethics should always:

Group of answer choices

a.Seek the counsel of the audit committee before deciding on an action.

b.Take action consistent with the principles embodied in The IIA’s Code of Ethics.

c.Act consistently with the employing organization’s code of ethics even if such action would not be consistent with The IIA’s Code of Ethics.

d. Seek counsel from an independent attorney to determine the personal consequences of potential actions.

Expert Solution

Ans1: The authority to make purchases of requisitioned materials and services. (option D)

When the purchasing department has the authority to purchase the required materials and services, only then an effective internal control system can take place. Hence, option d is the correct choice.

All other options mentioned are part of regular duties of the purchase department, hence, they all are incorrect.

Ans 2; Management and the board (option d)

The authority of internal audit function is limited to that provided jointly by management and the board. Hence, option d is the correct choice.

Ans 3: .Take action consistent with the principles embodied in The IIA’s Code of Ethics. (option b)

In such a situation, the auditor should take actions which are consistent with the principles mentioned in IIA' code of ethics. Hence, optin b is correct.

All other options are not the appropriate actions to be taken in such situation. hence, all other options are incorrect.

ekkarill92 answered 2 years ago

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