Mf0013 internal audit and control

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  • 1. Dear students get fully solved assignments Send your semester & Specialization name to our mail id -> help.mbaassignments@gmail.com or call us at -> 08263069601 Summer 2013 Master of Business Administration- MBA Semester 3 MF0013 – Internal Audit and Control - 4 Credits (Book ID: B1733) Assignment-60marks Note: Answer all questions. Kindly note that answers for 10 marks questions should be approximately of 400 words. Each question is followed by evaluation scheme. Q1.Discuss, in brief, the advantages and limitations of auditing. (Advantages of auditing 5 marks; Limitations of auditing 5 marks)10 marks Answer : Advantages of auditing : 1. Audited accounts are readily accepted in Government authorities like income Tax Dept., Sales Tax dept., Land Revenue departments, banks etc. 2. By auditing the accounts Errors and frauds can be detected and rectified in time. 3. Audited accounts carry greater authority than the accounts which have not been audited. Q2.Explain the key objectives of a good internal audit system. Write down the essentials for effective internal auditing. (Objectives of good internal audit system 5 marks ; Essentials of effective internal auditing 5 marks)10 marks Answer : Objectives of a good internal audit system : 1. To determine whether controls over financial and operating data provide managers with reasonable assurance that the financial and operating data is accurate and reliable (i.e., that information gathering and reporting has been properly planned, organized and directed). 2. To determine whether controls over compliance with policies, procedures, plans, laws and regulations provide managers with reasonable assurance that proper compliance actually occurs (i.e., that compliance activities have been properly planned, organized and directed). Q3.List the required qualifications of an internal auditor. Describe the role of internal auditor in the company’s management.(Listing of qualifications for internal auditor 5 marks; role of internal auditor 5 marks)10 marks Answer : Qualifications for internal auditor :
  • 2. The CIA designation is the only globally accepted certification for internal auditors and remains the standard by which individuals demonstrate their competency and professionalism in the internal auditing field. Since the program’s launch in 1973, it has opened up countless doors of opportunity for practitioners around the world as it communicates their ability to serve as a key player in their organization’s success. Candidates leave the program enriched with educational experience, applicable knowledge, and business tools that can deliver a positive impact in any organization or business environment. Q4.Explain the basic principles of governing internal control. (Basic principles of governing internal control 10 marks)10 marks Answer : Basic principles of governing internal control : 1. Record And Books : Books should be kept up to date and at regular intervals these should be balanced. Handling of cash transactions should be made by the different persons. For instance the cashier should not be allowed to record the cash received accounts book. He should have no concern with written ledgers. 2. Independent Checking : Work performed by one person should be independently and automatically checked by another person. Q5.Discuss the specific problems of Electronic Data Processing (EDP) relating to internal control. (Explanation of all problems of EDP 10 marks) 10 marks Answer : Problems of electronic data processing relating to internal control : 1. Separation of duties : In a manual system, separate individuals are responsible for initiating transactions, recording transactions, and custody of assets. As a basic control, separation of duties prevents of detects errors and irregularities. In a computer system, however, the traditional notion of separation of duties does not always apply. For example, as program may reconcile a vendor invoice against a receiving document and print a cheque for the amount owed to a creditor. Thus, this program is performing functions that in a manual systems would be considered incompatible. Q6.Explain the factors for having the effective internal control system for a bank. (Explanation of various aspects of having the effective internal control system 10 marks) Answer : Factors for having the effective internal control system for a bank : In the private sector, company directors are responsible for determining policy, monitoring performance and taking corrective action if either policy or its implementation is defective. Internal control provides a means of assurance that corporate objectives are being achieved. Thus the directors are responsible for internal control. In practice, the distinction among these categories and types is often difficult to recognize because an effective internal control structure requires elements of each. Even the descriptions of each category of control can vary among individuals. Dear students get fully solved assignments Send your semester & Specialization name to our mail id -> help.mbaassignments@gmail.com
  • 3. or call us at -> 08263069601