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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. 4.2 ... 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 of financial statements before they are audited externally. This involves ensuring that the financial statements are accurate, comply with relevant accounting standards, and are free from material misstatement.
Step 2
Give ONE reason why the accounting records of a listed company must be audited by an external auditor.
Answer
One important reason is that it is a requirement of the Companies Act. An external audit confirms that the company is adhering to proper accounting principles and reporting standards, thereby maintaining transparency for stakeholders.
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 whistle-blowers often feel vulnerable and fearful of retaliation, which can discourage them from reporting wrongdoing. It is essential to create environments where they feel safe to come forward, as their actions can help expose corruption and promote accountability.
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 concern arises because if whistle-blowers are not safeguarded, they may hesitate to report unethical practices, leading to unresolved issues and potential harm to the company’s reputation.
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Collusion with service providers: If the board is involved in collusion with service providers, it raises questions about the integrity of financial dealings, which could lead to financial loss or poor performance results.
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Lack of transparency in management actions: Concerns about transparency could arise if the board does not provide clear communication about company decisions, leading to mistrust among shareholders concerning the management's performance.