QUESTION 2

PART A

Calculus Ltd is a company that manufactures and distributes calculators. Thoko Benga was recently appointed as the chief audit executive (CAE) of Calculus. Currently, Thoko Benga reports to the chief financial officer (CFO) for both administrative and functional duties. The internal audit activity is placed within the finance division. As stated in the Standards the CAE must report periodically to senior management and the board on the internal audit activitys purpose, authority, responsibility and performance.

REQUIRED

2.1. Define the term internal audit charter and describe the three (3) elements of an internal audit charter.

2.2. Comment on the reporting structure of the internal audit activity within Calculus Ltd in relation to organisational independence.

2.3. List six (6) aspects that should be included in the CAEs reporting and communication to senior management and the board.