1. Internal Audit Definition

Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organizations operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.

Required:

Evaluate the objectives of FOUR (4) governance processes and FOUR (4) risk management that an internal auditor must consider and identify the audit work that must be done. (10 marks)

2. Under the Public Financial Management Act, Audit Committees are required to play important roles in corporate governance and Accountability.

Required:

Discuss FIVE (5) mandatory roles and responsibilities and FIVE (5) advisory roles and responsibilities of Audit Committees that may contribute to Corporate Governance and Accountability. (10 marks)

(Total: 20 marks)

QUESTION TWO

1. Sewerage Corporation was established by an Act of Parliament to provide water to Rural Communities. The team of auditors from the Ghana Audit Service demanded to verify the performance agreements made by the company with the state. The Managing Director refused on the grounds that the auditors were over- stepping the scope of their work. The auditors also discovered that the corporation has not establish an Audit Committee (AC), as required by the Public Financial Management Act 2016, Act 921. Management response was that AC was not established because it did not see its importance even though it is required by law.

Required:

1. Comment on the action of the Managing Director on the performance agreement. (5 marks)
2. Advise the Managing Director on the need to establish an Audit Committee (AC). (5 marks)

2. Recent developments in corporate governance focus on the importance of an organisations ability to identify and manage risk. It is the responsibility of management to identify and respond to risk, but as part of the organisations internal control, internal audit can help provide assurance that risks have been managed properly. Internal auditors may also be involved in providing consultancy services. However, a balance needs to be struck between a wish to increase the level of responsibility given to internal auditors, in order to benefit from their skills, and the danger that involvement which amounts to management involvement would compromise the independence of the internal auditors.

Required:

i) Discuss the nature of consultancy projects in internal auditing and the dangers in internal auditing becoming too involved in consultancy projects. (6 marks)

ii) Recommend FOUR actions to be taken to minimize the danger posed by internal audit becoming too involved in consultancy projects. (4 marks) (Total: 20 marks)

QUESTION FOUR

1. The Institute of Internal Auditors (IIA) defines Internal Auditing as:

An independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization to accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.

Required:

Assess the importance of THREE recommendations the IIA has made to ensure that internal auditors remain independent even though they are employees of the company.

(4 marks)

2. A public sector organisation has an Internal Audit function and an Audit Report Implementation Committee (ARIC) of the Board of Directors. The Internal Audit function does not have an Internal Audit Charter. Before the PFM Act, 2016 Act 921 was enacted,TheARIC has three members, the Managing Director of the organisation and two other directors, a legal practitioner and a retired career diplomat.

Required:

Identify the need for and state TWO of the major issues the Internal Audit Charter must cover in a public sector organisation. (4 marks)