For the Pinewood National Bank audit (described in E-1 and E-2), explain how you think the scope of the audit might include (1) each of the five internal control objectives and

(2) the nature of the examination, as specifically as you can, so that the auditors are examining and evaluating the adequacy and effectiveness of the bank’s internal control over its loan portfolio.

E-2

Required:

a. What performance audit objective might be included in the audit of the Pinewood National Bank’s loan portfolio described in E-1 above?

b. Identify at least one procedure that you think would help determine the level of performance of the bank’s loan portfolio. What audit evidence would be required to perform that procedure?

E-1 

The internal auditors for Pinewood National Bank were planning an audit of the bank’s lending policies and procedures. The auditors were especially interested in the quality of the bank’s loan portfolio and the effect that controls over the lending process had on the quality of the portfolio.

Required:

a. Identify at least three review audit procedures for this audit.

b. Identify at least two tests of compliance that probably would be required for this audit.

c. Identify at least two evaluation procedures that you think would be required for this audit.