AUD679 Odl test NOV2021 - Internal Auditing PDF

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Download AUD679 Odl test NOV2021 - Internal Auditing PDF

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CONFIDENTIAL

ODL/TEST1/NOV 2021/AUD679

UNIVERSITI TEKNOLOGI MARA TEST 1

COURSE

:

INTERNAL AUDITING

COURSE CODE

:

AUD 679

DATE

:

17 NOVEMBER 2021

TIME

:

2.30PM - 4.00PM

SEMESTER

:

OCT 2021– FEB 2022

INSTRUCTIONS TO CANDIDATES

1.

Answer ALL questions.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO This examination paper consists of 4 printed pages

1

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ODL/TEST1/NOV 2021/AUD679

QUESTION 1 An internal auditor acts as management controls and performs independent checks on the control system in an organization. In Malaysia, it is a requirement for public listed companies to have an internal audit function. This requirement has also extended to regulatory bodies and government agencies. Required: a.

State any four (4) types of internal auditing engagement. (4 marks)

b.

Explain briefly the roles and responsibilities of internal auditor in risk management and control. (6 marks)

c.

Discuss the differences between internal and external auditor in relation to the below features: i. ii. iii. iv. v.

Reporting Responsibility Independent Status Scope of work Timing and frequency of audit Professional Qualification (10 marks) (Total: 20 marks

QUESTION 2 The Malaysian Code of Corporate Governance (MCCG), first issued in March 2000 marked a significant milestone in corporate governance reform in Malaysia. The code was later revised in 2007, 2012, 2017 and the latest issued is 2021. The MCCG 2021 updates aim to promote new and enhanced best practices to fortify corporate governance practices and build business resilience and sustainability. Required: a.

List four (4) roles of audit committee in corporate governance. (4 marks)

b.

Explain briefly Comprehend, Apply and Report (CARE).

c.

Among the highlights and updated of the MCCG 2021 are:

(6 marks)

“The Chairman of the board should not be a member of the Audit Committee, Nomination Committee or Remuneration Committee” “Introduction of a 12-year tenure cap for independent directors and prohibit further extension of tenure beyond the 12th year”. “The Audit Committee members are expected to be financially literate and have sufficient understanding of the company’s business” 2

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ODL/TEST1/NOV 2021/AUD679

“Persons associate directly with the executive and active politicians are discouraged from holding board seats “ “to accelerate the progress of women’s board participations, the MCCG 2021 recommends 30% women directors across all boards” Required: Discuss the importance of the above highlighted areas in MCCG2021. (10 marks) Total: (20 marks) QUESTION 3 Encik Ibrahim is the newly appointed Chief Audit Executive Asli Karya Bhd. He has instructed his subordinates to conduct operational and financial audit upon Asli Karya. Asli Karya sells clothing, with a strategy of selling high fashion items under the Bajoo brand name. New ranges of clothes are introduced to stores every eight weeks. The company relies on a team of highly skilled designers to develop new fashion ranges. The designers must be able to anticipate and quickly respond to changes in consumer preferences. There is a high staff turnover in the design team because of high work pressured. The design team must be able to produce at least 5 new designs every week. The design must be able to generate significant sales to Asli Karya or else the team will not be getting their commission or bonuses. Most sales are made in-store, but there is also a very popular catalogue, from which customers can place an order on-line, or over the phone. Due to the pandemic Covid-19, the company has recently upgraded the computer system and improved the website, at significant cost, in order to integrate the website sales directly into the general ledger, and to provide an easier interface for customers to use when ordering and entering their credit card details. This to accelerate online shopping among the customer. The new on-line sales system has allowed overseas sales for the first time. The system for phone ordering has recently been outsourced. The contract for outsourcing went out to tender and Asli Karya awarded the contract to the company offering the least cost. The company providing the service uses an overseas phone call centre where staff costs are very low. The company owns numerous distribution centres, some of which operate close to residential areas. A licence to operate the distribution centres is issued by each local government authority in which a centre is located. One of the conditions of the licence is that deliveries must only take place between 8 am and 6 pm. The authority also monitors the noise level of each centre, and can revoke the operating licence if a certain noise limit is breached. Two licences were revoked for a period of three months during the year. En. Ibrahim and other internal auditors are keen to understand the control environment of Asli Karya Berhad before the commencement of audit. This process is crucial to identify control activities for example preventive, detective, directive, mitigating and compensating 3

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ODL/TEST1/NOV 2021/AUD679

control that can be used to address risk that could prevent Asli Karya from achieving its business objectives. Required: a.

Define preventive and detective control (4 marks)

b.

Explain three (3) elements of control environment (6 marks)

c.

Evaluate five (5) risk facing by Asli Karya Bhd to be considered when planning the operational audit for the year ended 31 December 2020. You may present your answer using the table below:

Cause of Risk

Potential Impact

1.

1.

(10 marks) (20 marks) Total Marks : 60 marks

END OF QUESTION “Raise your words, not voice. It is rain that grows flowers, not thunder.”- Rumi

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