Reference no: EM132990022

Question 1 - In Australia Internal auditors are not required to be members of any professional body such as the ICAA or CPA Australia. However, surveys have shown that the vast majority of internal auditors are members of one or both bodies. This is despite the existence of the Institute of Internal Auditors. The current trend is for organisations to outsource the internal audit function to another external provider.

Required -

a) Do you think internal auditors should be a member of a peak professional accounting body? If so, which body do you think is most appropriate and why?

b) What is your opinion on the external auditor or another assurance provider performing the internal audit function? Discuss the pros and cons.

Question 2 - Assume that you are completing the field work on payables at Shady Oaks Pty. Ltd.

The payables relate to medical supplies, employee provisions, other accruals, bank overdraft, and directors' loans. Each account is individually material. The accounts payable clerk has been on sick leave for the last three months. During this time, the remaining accounting staff have tried to cover for their absence, as well as continuing their own jobs.

Required -

a) What result would the disruption have on the assessed level of control risk?

b) How would the above impact on the audit approach?

c) Which management assertions are most at risk for the payables at Shady Oaks?

d) Would you use confirmations for your payables testing? If so, which balances and why?

e) Is subsequent payments and cut-off testing necessary? Explain and distinguish the difference between the two terms.