QUESTION $3$

$18$ marks

PART A

Since the internal audit activity of Extra Ltd has been recently established, John Dlamini realised that the purpose, authority, and responsibility of the internal audit activity should be established and agreed upon.

REQUIRED

$3\mathrm{.}1$ Name the document that the chief audit executive $($CAE$)$ can implement that will define the purpose, authority, and responsibility of the internal audit activity.

$3\mathrm{.}2$ Indicate who should approve this document?

$3\mathrm{.}3$ Explain the aspects that should be included in this document that grants the internal audit activity the necessary authority.

Marks

$(6)$

$5$

PART B

During the first board meeting it became clear that the board of Extra Ltd is unfamiliar with the role of the internal audit activity in terms of "governance" and "risk management" processes.

John Dlamini explained to management that the internal audit activity must assess and make appropriate recommendations to improve the governance processes, and the internal audit function should evaluate the effectiveness and contribute to the improvement of the risk management processes.

REQUIRED

$3\mathrm{.}4$ Describe the responsibilities that the internal audit activity is required to perform to improve the governance processes of Extra Ltd by referring to the Standards.

$3\mathrm{.}5$ Describe the responsibilities that the internal audit activity is required to perform to ensure that the risk management processes are effective.

MARKS