MF0013-Internal Audit & Control

Summer-2016

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Master of Business Administration - MBA Semester 3

MF0013-Internal Audit & Control

(Book ID: 1733)

Assignment (60 Marks)

Note: Answers for 10 marks questions should be approximately of 400 words. Each question is followed by evaluation scheme. Each Question carries 10 marks 6 X 10=60.

Q1. Distinguish between Government audit and Specific audit. Explain types of Government and Specific Audit?

Distinguish between Government audit and Specific audit. - 5

Explain types of Government and Specific Audit? - 5

Answer. Distinguish between Government audit and Specific audit:

Government audit is yet another variety of general audit. Government audit is a particular variety of external audit done by the CAG, concerned exclusively with government activity.

A specific audit is one which is limited in its scope in terms of coverage of areas, events or period. Generally, the objectives of specific audit are established before the audit starts. The objectives are specific, like detection of a suspected fraud, ascertainment of profits for declaration of interim

Q2. Write the similarity and dissimilarity of Internal and External Audit? Explain the Cooperation between external and internal auditor.

Similarity and Dissimilarity of Internal and External Audit - 5

Co-operation between external and internal Auditor - 5

Answer. Similarity

1. Evaluation of the internal control systems of the entity.

2. Correctness of accounting documentation, bookkeeping and financial reporting.

3. Verification of assets.

Q3. The audit firm follows certain policies and procedures. Explain the quality control policies adopted by an audit firm.

Explanation of all the 12 points under audit firm - 10

Answer. 12 Points:

1. The audit firm should ensure that all audits comply with auditing standards, and accordingly the firm has to design and implement quality control policies and procedures.

2. The quality control policies to be adopted by an audit firm will usually include the following:

(a) Professional requirements: The firm’s personnel have to follow the principles of independence, objectivity, confidentiality, integrity and professional behaviour.

Q4. Explain the basic principles of governing internal control.

Answer. Principles of governing internal control:-

 1. Objectives and Purpose of Internal Control

Internal control comprises preventive actions as well as daily and subsequent controls needed to ensure the achievement of business objectives. Internal control plays an active role in company management, administration and daily operations.

Objectives of internal control are:

• Effectiveness and efficiency of operations

• Reliability of financial and operational reporting

• Compliance with laws, agreements and policies

• safeguarding assets and information

Q5. Discuss the specific problems of Electronic Data Processing (EDP) relating to internal control.

Answer. In an EDP system, the following problems arise in the implementation of internal control:

a) Separation of duties:

In a manual system, separate individuals are responsible for initiating transactions, recording transactions, and custody of assets. As a basic control, separation of duties prevents of detects errors and irregularities. In a computer system, however, the traditional notion of separation of duties does not always apply. For example, as program may reconcile a vendor invoice against a receiving document and print a cheque for the amount owed to a creditor. Thus, this program is performing functions that in a manual systems would be considered incompatible.

Q6. Explain the factors for having the effective internal control system for a bank.

Answer. An effective internal control system requires that the material risks that could adversely affect the achievement of the bank’s goals are being recognized and continually assessed. This assessment should cover all risks facing the bank and the consolidated banking organization (that is, credit risk, country and transfer risk, market risk, interest rate risk, liquidity risk, operational risk, legal risk and reputational risk). Internal controls may need to be revised to appropriately address any new or previously uncontrolled risks.

Summer-2016

Get solved assignments at nominal price of Rs.125 each.

Mail us at: subjects4u@gmail.com or contact at

09882243490