AUI3704/203/2/2020
Tutorial Letter 203/2/2020
The Internal Audit Process: Managing the
Internal Audit Activity
AUI3704
Semester 2
Department of Auditing
IMPORTANT INFORMATION:
SUGGESTED SOLUTION TO ASSIGNMENT 03 0F 2020 FOR THE SECOND
SEMESTER.
BARCODE
, SUGGESTED SOLUTION TO COMPULSORY ASSIGNMENT 03 OF 2020
This tutorial letter provides feedback on compulsory Assignment 03. You need to study the
contents of this tutorial letter carefully because it will provide you with valuable insight and assist
you with your examination preparation. The study references are provided to assist you.
Therefore, please refer to them to obtain a better understanding of the suggested solution.
QUESTION 1 20 marks
1.1 How internal auditors can help to alleviate specific concerns that beset the audit
committee members in exercising their responsibilities
References:
King IV
Standard 2110, 2130
1. Legal action (½):
The internal audit activity (IAA) must supply the audit committee with copies of audit
reports. (1) These can convey to the audit committee the problems being
encountered and the action taken to correct identified defects and weaknesses. (1)
This serves as a defence against accusations of not being informed and the audit
committee can use these reports to anticipate the risk of legal action. (1)
2. Information technology systems (½):
To comply with their responsibility, the IAA reviews the reliability and integrity of
financial and operation information (1) and the means to gather such information. They
can give thorough assurance about the information technology systems and report
weaknesses. (1) They can give the board assurance on the effectiveness of the IT
governance and internal controls. (1)
3. Compliance (½):
The IAA must review the systems established to ensure compliance with policies,
plans, procedures, laws and regulations, (1) which could have a significant impact on
operations and reports. (1) They can provide information on non-compliance if
necessary. (1)
4. Effectiveness of internal controls (½):
The IAA should provide a written assessment (1) of the effectiveness of the company's
system of internal controls and risk management. (1) Internal controls should be
established not only over financial matters, (1) but also operational, compliance and
sustainability issues. (1)
(Marks as indicated, maximum of 10 marks, ½ mark for the correct heading)
1.2 The value and usefulness of a brochure about the internal audit activity,
explaining the activities and status that the internal audit activity can have in an
organisation
References:
Standard 1000
A brochure about the internal audit activity can be sent to each manager prior to
2
Tutorial Letter 203/2/2020
The Internal Audit Process: Managing the
Internal Audit Activity
AUI3704
Semester 2
Department of Auditing
IMPORTANT INFORMATION:
SUGGESTED SOLUTION TO ASSIGNMENT 03 0F 2020 FOR THE SECOND
SEMESTER.
BARCODE
, SUGGESTED SOLUTION TO COMPULSORY ASSIGNMENT 03 OF 2020
This tutorial letter provides feedback on compulsory Assignment 03. You need to study the
contents of this tutorial letter carefully because it will provide you with valuable insight and assist
you with your examination preparation. The study references are provided to assist you.
Therefore, please refer to them to obtain a better understanding of the suggested solution.
QUESTION 1 20 marks
1.1 How internal auditors can help to alleviate specific concerns that beset the audit
committee members in exercising their responsibilities
References:
King IV
Standard 2110, 2130
1. Legal action (½):
The internal audit activity (IAA) must supply the audit committee with copies of audit
reports. (1) These can convey to the audit committee the problems being
encountered and the action taken to correct identified defects and weaknesses. (1)
This serves as a defence against accusations of not being informed and the audit
committee can use these reports to anticipate the risk of legal action. (1)
2. Information technology systems (½):
To comply with their responsibility, the IAA reviews the reliability and integrity of
financial and operation information (1) and the means to gather such information. They
can give thorough assurance about the information technology systems and report
weaknesses. (1) They can give the board assurance on the effectiveness of the IT
governance and internal controls. (1)
3. Compliance (½):
The IAA must review the systems established to ensure compliance with policies,
plans, procedures, laws and regulations, (1) which could have a significant impact on
operations and reports. (1) They can provide information on non-compliance if
necessary. (1)
4. Effectiveness of internal controls (½):
The IAA should provide a written assessment (1) of the effectiveness of the company's
system of internal controls and risk management. (1) Internal controls should be
established not only over financial matters, (1) but also operational, compliance and
sustainability issues. (1)
(Marks as indicated, maximum of 10 marks, ½ mark for the correct heading)
1.2 The value and usefulness of a brochure about the internal audit activity,
explaining the activities and status that the internal audit activity can have in an
organisation
References:
Standard 1000
A brochure about the internal audit activity can be sent to each manager prior to
2
