Discuss the key issues that must be understood and addressed

Assignment Help Accounting Basics

Reference no: EM131956274

Problem

Pat Goodly accepted the CAE position at a large, global organization with a well-established internal audit function. The organization is admired as an industry leader and as having very strong corporate governance practices. The organization's board is predominantly made up of outside, independence directors, all of whom are qualified. The chair of the audit committee is designated as the audit committee's financial expert.

The organization's fiscal year-end is approaching; only a little over a month away. After a brief 2 months in the new position, Pat is preparing for the upcoming audit committee meeting. This typically is the meeting at which next year's internal audit plan and budget would be presented for approval by the audit committee, as well as any necessary fiscal year-end reporting.

Recently, Pat received a "welcome" call from the audit committee chair, indicating "full" support for Pat and the internal audit function. The audit committee chair expressed an interest in meeting Pat and gaining an understanding of the vision and direction. Pat has forthe internal audit function going forward. The audit committee chair indicated that periodic communications between them were important and would allow for open and candid dialog in the future.

Pat was hired by, and currently reports to, the chief financial officer (CFO). Historically, the audit committee meeting agenda,and related topic selections for such, have been performed by the CFO. The CFO also has presided over the meetings in the past.

Senior management, including the CEO and the CFO, expressed support for the internal audit function and Pat's vision for the funtion both during the recruiting process and subsequent to Pat's joining the organization. Howerver, the CFO firmly stated in a recent staff meeting, "I know everyone is very busy and things are going to get even more hectic with year-end upon us. I think it is in everyone's best interest not to make any "radical" changes in our organizational reporting structure until we get through the fiscal-year end closing and reporting cycle. If we keep our heads down and work hard, we should be able to get through this year-end okay."

In preparation for the upcoming audit committee, Pat contemplated the CFO's comments and reflected on the IIA's professional standards as they relate to the CAE's reportng responsibilities to management and the board. Put yourself in Pat's position as they newly hired CAE and consider the following:

A: How should Pat proceed with the audit committee chair? What obligations does Pat have, if any, to the audit committee chair? As the CAE,what are Pat's role and responsibilities with respect to the audit committee and the audit committe chair?

B: Discuss the key issues that must be understood and addressed (and with whom) to properly discharge any reporting responsibilities noted.

Reference no: EM131956274

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