ACC303 Auditing and Assurance Services Tutorial

Q13.

Simon Lim is hired recently to oversee the function of internal audit of ABC Sdn. Bhd. ABC is a family-owned construction company in Malaysia. It has been achieved a good growth rate of 20 to 30 percent per annum over the last 5 years. Currently the turnover for the company is RM50 Billion and it maintained a handsome profit margin due to good management and leadership.

The internal audit department was only recently established in view of the planning to take the company a step higher to be listed in Malaysia. The directors of the company are mainly from the Chans family and they are mostly from the engineering background and they have very limited accounting and finance knowledge. However, they believe in good corporate governance. Even though the corporate governance system is company is still at the infant stage but the board of directors are keen to invest a lot of financial resources to ensure a good corporate governance as this is part the capital market requirements in Malaysia.

Required:

1. Outline Two (2) attributes of good corporate governance. (4 marks)
2. Explain how internal auditors help in assisting the board of directors in practicing good governance in the company. (6 marks)
3. Explain how internal audit contributes to external audit. (4 marks)
4. Explain the pros and cons for the company to set up an audit committee. (6 marks)