You have recently accepted the position of chief audit executive at Hitech Circuitry Inc., a large

international manufacturer and distributor of complex computer circuits with its head office in Burlington, Ontario. The company competes in a market in which technical innovation is the most important key to success, with quality control and marketing the next most important factors. The company markets extensively on the Internet and has up-to-date software to accept and process sales orders electronically.

The staff of your internal audit department consists of 12 qualified accountants, all recruited directly from public practice accounting firms. Eight of them work at the companys Canadian head office and the other four at strategic locations throughout the world to enable them to audit the companys overseas activities.

During your first week at work, you come across the departments policy and procedure manual, which includes the following:

a. In case of an internal audit scope limitation, the CAE should communicate verbally to the CEO. (2 marks)

b. The chief audit executive reports directly (functionally and administratively) to the CEO. (2 marks)

c. All internal audit staff shall be required to hold a professional accounting qualification and have a minimum of three years experience in auditing with a professional accounting firm. (2 marks)

d. Because only professionally qualified staff with external audit experience are employed by the

department, it is not necessary to provide continued training. (4 marks)

Required

Comment on the appropriateness of each of the statements from the policy and procedure manual, stating whether you believe that the policy or procedure violates the IIAs International Standards for the Professional Practice of Internal Auditing and why