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ASSIGNMENT
DRIVE FALL 2014
PROGRAM MBADS – (SEM 3/SEM 5) / MBAN2 / MBAFLEX – (SEM 3) /
PGDFMN – (SEM 1)
SUBJECT CODE & NAME MF0013 - INTERNAL AUDIT & CONTROL
SEMESTER 3
BK ID B1733
CREDITS 4
MARKS 60
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.
1 Distinguish between secretarial audit and cost audit. Write the advantages and disadvantages of
continuous and periodical audit.
Answer : What is a Secretarial Audit?
As per the "Reference on Secretarial Audit" issued by Institute of Company Secretaries of India (ICSI),
a "Secretarial Audit is compliance audit; it is a part of total compliance management in an
organisation. The Secretarial Audit is an effective tool for corporate compliance management. It
helps ensure timely corrective measures when non-compliance is detected.".
What is the main objective of a Secretarial Audit?
The object of a Secretarial Audit is to provide
2 Write the characteristics of internal check system. Explain the essentials of effective internal
auditing.
Answer : Internal Check or internal audit is an arrangement of staff duties whereby no one person is
allowed to carry through and record every aspect of transactions so that without collusion between
two or more persons, fraud is prevented and at the same time the possibilities of errors is reduced
to a minimum.
Internal Check is a system or method introduced with defined instructions given to staff as to their
sphere of work with a view to control and verification of their work and also maintenance of
accurate records as the ultimate aim.
3 The audit firm follows certain policies and procedures. Explain the quality control policies
adopted by an audit firm.

2. Answer : To fully appreciate the need for the existence of quality control policies and procedures in
an audit firm, students should focus on the assertion that auditing is a commercial activity. As such,
in order to achieve the objective of (at least) maintaining the profitability of an audit firm, the audit
partners need to:
 make best use of the resources of the firm;
 maintain a good level of service and quality of advice to clients;
 minimise the risk of litigation against the
5 Discuss the specific problems of Electronic Data Processing (EDP) relating to internal control.
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.
6 Explain the factors for having the effective internal control system for a bank.
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. Inte rnal
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. However,
regardless of how internal controls are organized or defined, they should not be thought of as
alternatives to each other.
Dear students get fully solved assignments
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