QUESTION $1$

$27$ marks

Dream$-$on Ltd manufactures and sells mattresses. You are the newly appointed chief audit executive $($CAE$)$ for the recently established internal audit function. The board and the chief executive officer $($CEO$)$ are unsure about the roles and responsibilities of the internal audit function.

To clear the misconceptions surrounding internal audit, you have decided to conduct introductory briefing sessions to the board and senior management separately. In your presentation you cover the following topics:

Organisational objectives and how internal audit can assist in achieving them.

Differences between internal and external auditing.

Certain responsibilities of internal auditing.

REQUIRED

Marks

$1\mathrm{.}1$ Identify the type of organisational objective from the following definitions:

a$)$ This type of organisational objective pertains to the effectiveness and efficiency of the organisation's operations, including performance and profitability goals and safeguarding resources against losses.

b$)$ This type of organisational objective pertains to adherence to applicable laws and regulations.

c$)$ This type of organisational objective pertains to the value creation choices management makes on behalf of the organisation.

d$)$ This type of organisational objective pertains to the reliability of internal and external reporting of financial and operational information.

$1\mathrm{.}2$ Most of the board members were debating the reporting lines for the internal audit function. According to the IIA Standards, recommend what type of reporting is preferred for independence purposes.

$1\mathrm{.}3$ One of the board members stated that since external and internal auditors are needed for the organisation, there should be proper coordination to ensure optimal audit coverage. Discuss seven $(7)$ actions that contribute to productive cooperation and coordination between external and internal auditors.

$1\mathrm{.}4$ The CEO asked for clarification on how the internal auditor can be an advisor in the organisation. Give seven $(7)$ examples of how internal audit can assist management.

$3$

$1\mathrm{.}5$ Explain the aspects that should be included in the internal audit charter that

$(5)$

grant internal audit the necessary authority.