4. In exhibit 3-4 the internal audit function is included in the assurance box. In light of this assurance role, discuss the pros and cons of the chief audit executive (CAE)reporting to the board of directors (or one of its committees) versus the chief financial officer Relate your answer to the concepts described in Standard 1100: Independence and Objectivity

6. The General Auditors Office (CAO) of ABC jurisdiction issued a report on the XYZ Electric Corporative a large member-owned utility. This report reviewed the work of MNO Consulting MNO found numerous internal control weakness. The GAO concurred with MNOs conclusion and recommendations regarding the overall lack of effective internal controls. In particular, the GAO went on the recommended that the ABC jurisdictions legislature should require by law that each cooperative;

• Create a board of directors (board) and maintain a separate audit committee.
• Employ an internal auditor who reports to the board. A reporter for the local newspaper has a couple of questions for you.

1. Typically, what is the governing boards responsibility for internal controls?
2. Why would the GAO want each cooperative board to employ an internal audit?