Stapleking (Pty) Ltd is a large manufacturer and wholesaler of a wide range of fasteners e.g., staples, tacks, drawing pins. The company has several divisions e.g., commercial fasteners, domestic fasteners etc. Controls are sound and include an internal audit department which is staffed by competent internal auditors. Internal audit activities are scheduled at the start of each financial year but during the year, numerous requests are received from within the company for “internal audit” to carry out various assignments. The following requests have been received:
1. Lindsay Haffejee, the chief audit executive, has been asked by the human resources director to serve on a selection committee for the appointment of a new company secretary.

2. The financial director has asked the internal audit department to design and implement a costing system for a new type of product which is to be manufactured.

3. The IT manager has asked internal audit to conduct a post-implementation review on a recently introduced telesales ordering system.

4. The warehouse manager has requested internal audit to perform an audit to determine whether the company is complying with all necessary safety regulations e.g., fire protection, ventilation etc. 

5. The financial director has requested internal audit to schedule an investigation into the payroll and personnel cycle to determine whether there are fictitious employees, (dummy workmen), on the payroll.

6. The production director has requested internal audit to conduct inventory cycle counts in the finished goods warehouse on an ongoing basis.

7. The external auditors have requested internal audit to assist them with the verification of the existence of plant and equipment at an interim audit.

8. The board of directors has requested internal audit to assist in identifying, evaluating and assessing significant organizational risks.

9. The sales director has requested internal audit to evaluate the operational efficiency of the company’s procedures for placing tenders for the supply of the company’s products to government departments.

10.The financial director has requested internal audit to perform an analysis of the monthly management accounts and make a presentation to the Board on a quarterly basis.

REQUIRED 

2.1 Indicate how the board of directors can promote the status of the internal audit department. (6)

2.2 Indicate, giving reasons how Lindsay Haffejee, as the chief audit executive, should respond to the above. n