Session 3

[Acid]

Q: What exactly are the differences between what External auditor and internal auditors look for regarding the internal control systems of the client ?

Note : Your answer should describe the interest of external auditors in the internal control systems and that of the internal auditors , thier responsibilities and role .

[Kelly]

Hi did I miss something, I thought we were waiting for feedback to Session 1??
I haven't done session 2 yet - and there aren't many anwsers to session 2 either, maybe they have been awnsered via private messages.....
How are we going to go forward with these qns?

Will the Qns be posted every couple of days, and then leave it to whoever finds time to awnser qns to do so, or do we wait for feedback from tutors to correct and advise on each qn before we proceed to the next qn?

I'm a bit confused as to what to do.. It will be hard for me to do a qn every day or so, as I have paper F7 to study aswell (and I work). The last thing I want to do is sacrifice one paper for the sake of another.

Am I the only person thinking along these lines or are there more out there in the land of confusion!!!???
Kelly

[Vivienne]

Management is responsible for implementing an internal control system.this is to enable it to achieve corporate goals that it has set.the internal controls comprise control activities that are set in order to achieve them

Management also has a role in managing the risks that an entity faces.it is for this reason that it will design its controls well as a matter of commitment.

Internal auditors come in at this point.they have to esure that the internal controls that are put in place are adequate to check the system.they also check whether these controls are working that is are they effective in achieving the intended purpose.one way of ensuring effectiveness is pre audits.if for example the payment of casualwages is being audited they would check for the following
1)are the requisitions for casuals attached to the wages sheet. if they are ,does the number of employees on requisition tie up with the number on the wages computation.
2)are the time sheets attached to the wage sheets and the accuracy of the computations
3) authorisations of overtime and any other work has it been sought and signed for.

internal auditors have a responsibility towards internal controls because if there was no one to check if those systems are in place then setting them up would have been in vain.
they also provide assurance that the controls that management put in place are adequate.

when external auditors are auditing an entity they seek to rely on the internal controls on the system.if they find that the internal controls are weak then they will place less reliance.if on the other hand the internal controls are strong then they will rely on them and reduce the amount of substantive testing on the transactions.the operation of internal controls ensures accuracy of accounting records.this is very important to the external auditors as they are required to form an opinion on these accounts.

in extreme situatuins auditors may refuse to act for a client whose internal control systems are weak as they would have little or no confidence in the infromation provided.

the end

[Acid]

Vivie your session 3 answer is excellent!! It gives a clear differences between internal and external auditors role in internal controls in very understandable way!


Acid

[Vivienne]

thanks man. i am really enjoying and i am surely learning a lot because believe you me whatever questions we have gone through so far i can never forget even in an exam.they are really opening me up.i am a lot better than when we started.

the war continues!

[Acid]

The External Auditors role in Internal control system :

- Check effectiveness of internal control system

- Check internal control policies are effectively implemented

- Report on the effectiveness of internal control system

- Rely on the internal auditors work so its vital to ensure that the controls are good.


The Internal auditors concern about Internal control systems

- Design a good internal control system

- Report on effectiveness of internal control system

- Ensure policies set are running in the company

- Provide recommendations about a better interal control system



__________________________________________________ ___________


Acid

[raymondhoh]

whether examiner accept our answer in point form format?

[Pixiefeet]

I like Acid layout but I might try to put it into sentence format with more or less the same info

[rajni]

Hi Acid

your answer has been marked. please find the attachment.

[rajni]

Hi Vivienne,

your answer has been marked. please find the attachment.

[Acid]

LOL - Acid got 5 marks which are publically available to see :o