Discuss four audit procedures necessary to obtain appropriate audit evidence and give an example in each case.

LO1. Demonstrate ability to critically explain audit approaches and procedures, which are appropriate to a range of business situations
LO2. Apply systematic knowledge of the principles of internal control evaluation and the audit of statement of financial position areas.
LO3. Critically analyse financial and non-financial information relevant to the audit of a limited company using appropriate analytical and review procedures

Assignment Task

You have recently secured a job as an internal audit manager in a company preparing to become listed in two years’ time. Having been informed that the company is deficient in its internal control processes, you have now been charged with recommending a robust system to reduce control risk. This will also help the company in preparation for listed status. In addition, the management has requested your help in understanding the audit procedures usually carried out by external auditors to obtain appropriate audit evidence.

Following your first management meeting, you realise that management have little knowledge of external audits and hold the general belief that, “An audit is only for compliance and doesn’t provide any benefits to the business – it is simply ‘red tape’ and can’t even stop fraud. The costs of the audit represent a non-productive expense and the money could be better used elsewhere.”

Required:

Part A

You should research and write a report to the management disproving their assertions and enlightening them on the significance of audits in a modern business. Your report must be original, convincing and backed by research.

Part B

Recommend four control activities to help create a robust internal control system, giving practical examples in each case. You should support your recommendations with appropriate research where necessary.

Part C

Discuss four audit procedures necessary to obtain appropriate audit evidence and give an example in each case.

Specific Marking Criteria:

Introduction (5 marks)

Part A (30 marks)

Part B (20 marks)

Part C (20 marks)

Conclusion (10 marks)

In-text citations (5 marks)

Reference list (5 marks)

Structure/presentation (5 marks)

Total marks for assignment 100%

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