SILVER BIRD CASE RAISES SEVERAL AUDIT-RELATED ISSUE

According to article published in the Star on 22 August 2012. a local public Iisted company, Silver Bird Group Berhod had raised a plethorg of issues on the distinction between the functions of internal and external audit It is indeed right to say that "there is a universal lack of understanding of the internal audit profession". The Siver Bird case has brought this issue to the forefront. To the credit of the regulators internal | audit's importance and the role it plays in corporate governance was brought to the foretront with the internal audit function being made mandatory for a lsted company beginning Jan 31 2009 The isting rules also stipulate the independence of the function from the activities that it audits. Most importantly, reporting is not to executive management but to the audit committee It must be pointed out that Malaysia is one of the very few jurisdictions in the world that has internal audit as a mandated function with its reporting line clearly spelt out. This requirement brings with it a cost factor. In an effort to smoothen the odherence process the regulators gave the option of the function either being in-hoUse or outsourced. This choice of option, including the costs incurred to be reported in the listed company's annual report. Herein the distinction between internal audit and external audit has to be explained. The role of the external auditors is primarily to express an opinion on the veracity of the financial statements. This is done in accordance with approved standards on auditing in Malaysia.

a) Discuss whether the auditors are guilty of professional neglgence in not detecting the fraud

b) Explain 1 element of corporate governance that could be occur in this case.

SILVER BIRD CASE RAISES SEVERAL AUDIT -RELATED ISSUE According to article published in the Star on 22 August 2012. a local public listed company, Silver Bird Group Berhad had raised a plethora of issues on the distinction between the functions of internal and external audit. It is indeed right to say that "there is a universal lack of understanding of the internal audit profession". The Silver Bird case has brought this issue to the forefront. To the credit of the regulators, internal audit's importance and the role it plays in corporate governance was brought to the forefront with the internal audit function being made mandatory for a listed company beginning Jan 31, 2009. The listing rules also stipulate the independence of the function from the activities that it audits. Most importantly, reporting is not to executive management but to the audit committee. It must be pointed out that Malaysia is one of the very few jurisdictions in the world that has internal audit as a mandated function with its reporting line clearly spelt out. This requirement brings with it a cost factor. In an effort to smoothen the adherence process, the regulators gave the option of the function either being in-house or outsourced. This choice of option, including the costs incurred. is to be reported in the listed company's annual report. Herein the distinction between internal audit and external audit has to be explained. The role of the external auditors is primarily to express an opinion on the veracity of the financial statements. This is done in accordance with approved standards on auditing in Malaysia. Based on the case of Silver Bird Group Berhad, in a group of 4 persons, you are required to: a) Discuss whether the auditors are guilty of professional negligence in not detecting the fraud. (CLO 3, A2) (30 M) b) Explain 1 element of corporate governance that could be occur in this case. (CLO 3, A3) (20 M) A. SILVER BIRD CASE RAISES SEVERAL AUDIT -RELATED ISSUE According to article published in the Star on 22 August 2012. a local public listed company, Silver Bird Group Berhad had raised a plethora of issues on the distinction between the functions of intemal and external audit. It is indeed right to say that "there is a universal lack of understanding of the internal audit profession". The Silver Bird case has brought this issue to the forefront. To the credit of the regulators, internal audit's importance and the role it plays in corporate governance was brought to the forefront with the internal audit function being made mandatory for a listed company beginning Jan 31, 2009 The listing rules also stipulate the independence of the function from the activities that it audits. Most importantly, reporting is not to executive management but to the audit committee. It must be Lointed out that Malaysia is one of the very few jurisdictions in the world that has internal audit as a mandated function with its reporting ine clearly spelt out. This requirement brings with it a cost factor. In an effort to smoothen the adherence process, the regulators gave the option of the function either being in-house or outsourced. This choice of option, including the costs incurred, is to be reported in the listed company's annual report. Herein the distinction between internal audit and external audit has to be explained. The role of the external auditors is primarily to express an opinion on the veracity of the financial statements. This is done in accordance with approved standards on auditing in Malaysia, Based on the case of Silver Bird Group Berhad, in a group of 4 persons, you are required to: a) Discuss whether the auditors are guilty of professional negligence in not detecting the fraud. (CLO 3, A2) (30 M) b) Explain 1 element of corporate governance that could be occur in this case (CLO 3, A3) (20 M) FORMAT YA