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Auditing: - Explain ONE duty of an internal auditor - NSC Accounting - Question 4 - 2023 - Paper 1
Question 4
Auditing: - Explain ONE duty of an internal auditor. - Give ONE reason why the accounting records of a listed company must be audited by an external auditor. Whis... show full transcript
Worked Solution & Example Answer:Auditing: - Explain ONE duty of an internal auditor - NSC Accounting - Question 4 - 2023 - Paper 1
Step 1
Explain ONE duty of an internal auditor.
Answer
One key duty of an internal auditor is to oversee the preparation and internal audit of financial statements before they are reviewed by an external auditor. This ensures that the financial reports are accurate and comply with required standards.
Step 2
Give ONE reason why the accounting records of a listed company must be audited by an external auditor.
Answer
The accounting records of a listed company must be audited by an external auditor to comply with the requirements of the Companies Act. This is crucial as it confirms that the company adheres to accounting principles and enhances the credibility of the financial statements, thereby protecting shareholder interests.
Step 3
What would you say to Sally regarding her statement in the first paragraph about whistle-blowers not being willing to take a stand against corruption? Explain ONE point.
Answer
I would explain to Sally that it is important for individuals to support whistle-blowers as they play a critical role in exposing wrongdoing. Not taking a stand can perpetuate a culture of silence, where illegal activities remain unreported, and can ultimately harm society. Whistle-blowers should not feel alone, as protection mechanisms are in place to help those who expose corruption.
Step 4
As a shareholder, explain THREE points that would concern you about the actions of the board of directors of Monaco Ltd. In EACH case, give a suitable reason for your concern.
Answer
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No protection for whistle-blowers: This is concerning as it may discourage employees from reporting unethical practices, leading to potential legal issues for the company.
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Collusion with service providers: If the board is involved in collusion, this could result in financial mismanagement and a loss of trust from shareholders and the public.
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Lack of transparency in company decisions: Without transparency, shareholders cannot assess the true financial health of Monaco Ltd, which raises concerns about accountability and governance.