BA202 AUDITING 1

Tutorial 3

1.
(a) What procedures are common to operational and financial auditing?
(b) Explain the differences between operational and financial auditing.

2. In auditing, the importance of auditor independence cannot be over-emphasised. Discuss the effect on independence when carrying out an operational audit from the point of view of:
(a) the internal auditor
(b) the external auditor

3.
(a) Discuss the role of an internal audit department in a large business organisation.
(b) What objectives are common to both internal and external auditors?
(c) What factors should be considered by external auditor when deciding to what extent he or she may rely on the work of the internal auditor?
(d) In what specific ways can the internal auditor help the external auditor?

4. The audit committee has asked you to set out your views on the different roles of external and internal auditors, the question of auditor independence, the nature of the work they carry out and their reporting responsibilities.

5. The board of directors of one of your clients which has several controlled entities requested a report for you on the formation of an internal audit department. The directors requested a detailed recommendation on how an internal audit department should be established, the nature of the work that the department should perform and other specific suggestions to make this new department more effective. The board also wished to know whether the internal audit department would enable you, the external auditor, to reduce the extent of the normal audit work. Present a report on this matter to the next board