John Shultz, an external independent auditor, is in the planning stage of the Year 10 audit of Banking Group, and wants to use the work of the internal audit function in obtaining evidence as well as utilize the internal audit function to provide direct assistance. PARTI Review the exhibits provided and determine the level of competency of the internal audit function, the objectivity of the internal auditors, and whether the internal audit function applies a systematic and disciplined approach. In the Assessment column, select from the option list provided the assessment of each criteria of the internal audit function. EXHIBITS option below Internal Auditor Informati... Competent Internal Audit Fur Lacks competence Unable to determine 1 Criteria RESET 2 Competency of internal auditors CANC 3 Objectivity of internal auditors 4 Application of systematic and disciplined approach by internal audit function A B 1 1 Internal Auditor Workpaper Yes/No 2 Prepaid Assets 3 Materiality calculation workpaper III 4 Assessment of control risk and inherent risk Yes 2 Determine unannounced (or unpredictable audit procedures) for journal entry testing 3 Test the control procedure that the bank reconciliation requires two signatures !!! 4 Verify that equipment additions are valid by inspecting the equipment on the factory floor Determine whether items shipped match what was ordered by inspecting a sample of III 5 prenumbered shipping documents and agree to sales order 6 Evaluate the sufficiency of audit tests performed for derivatives III Making required inquiries of entity personnel or those charged with governance related to the 7 identification of fraud risks and determining the procedures to respond to such risks