Audit: Investigation
Audit & Investigation
AQ002-3.5-2-AINV-T
15-Jun-12
WASEED AHMED
LECTURER: MR. MEGAT ABDULLAH MEGAT MAHMUD
Table of Contents Different roles of internal and external auditors. 4 Internal auditors: 4 External auditors: 4 Identify the benefits in forming an audit committee. 6 Evaluate the strengths and weaknesses of MPL’s control environment: 7 Control Environment: 7 a. Integrity and Ethical Values: 7 b. Participation of Board of Directors or Audit Committee: 7 c. Management Philosophies and Operating Style: 7 d. Organisation Structure: 8 e. Assignment of Authority and Responsibility: 8 f. Human Resource Policies and Practices: 8 Strengths of MPL’s Control Environment: 8 Weaknesses of MPL’s Control Environment: 9 Discuss the factors in MPL control environment that have led to and facilitated Mike’s manipulation of inventory. 9 a. Human Resource Policies: 10 b. Participation of Board of Directors or Audit committees: 10 c. Organisation Structure: 10 Analyse the audit procedures which the auditors apparently did not follow that could have detected Mike’s fraudulent increase of inventory. 11 a. Maintain professional skepticism 11 b. Hold discussions among the engagement team 11 c. Conduct risk assessment procedures and related activities 11 d. Making inquires of management and others within the entity: 11 e. Performing Analytical procedures: 12 f. Evaluating fraud risk factors: 12 g. Monitoring: 13 The implication to an auditor, whose failure in detecting material fraud as described here. 14 Areas of concern which the auditors should take up with the client’s audit committee, if one is formed in the future. 15 Audit Committee: 15 Recommendation to an audit committee: 16 REFERENCES 17
ACKNOWLEDGEMENT
I would like to thank various people who have made contributions and helped us in making this report.
AQ002-3.5-2-AINV-T
15-Jun-12
WASEED AHMED
LECTURER: MR. MEGAT ABDULLAH MEGAT MAHMUD
Table of Contents Different roles of internal and external auditors. 4 Internal auditors: 4 External auditors: 4 Identify the benefits in forming an audit committee. 6 Evaluate the strengths and weaknesses of MPL’s control environment: 7 Control Environment: 7 a. Integrity and Ethical Values: 7 b. Participation of Board of Directors or Audit Committee: 7 c. Management Philosophies and Operating Style: 7 d. Organisation Structure: 8 e. Assignment of Authority and Responsibility: 8 f. Human Resource Policies and Practices: 8 Strengths of MPL’s Control Environment: 8 Weaknesses of MPL’s Control Environment: 9 Discuss the factors in MPL control environment that have led to and facilitated Mike’s manipulation of inventory. 9 a. Human Resource Policies: 10 b. Participation of Board of Directors or Audit committees: 10 c. Organisation Structure: 10 Analyse the audit procedures which the auditors apparently did not follow that could have detected Mike’s fraudulent increase of inventory. 11 a. Maintain professional skepticism 11 b. Hold discussions among the engagement team 11 c. Conduct risk assessment procedures and related activities 11 d. Making inquires of management and others within the entity: 11 e. Performing Analytical procedures: 12 f. Evaluating fraud risk factors: 12 g. Monitoring: 13 The implication to an auditor, whose failure in detecting material fraud as described here. 14 Areas of concern which the auditors should take up with the client’s audit committee, if one is formed in the future. 15 Audit Committee: 15 Recommendation to an audit committee: 16 REFERENCES 17
ACKNOWLEDGEMENT
I would like to thank various people who have made contributions and helped us in making this report.
References: * Blurtit.com (n.d.) What Is The Difference Between External And Internal Auditor? - Blurtit. [online] Available at: http://www.blurtit.com/q573269.html [Accessed: 14 Jun 2012]. * Investopedia.com (2012) Audit Committee Definition | Investopedia. [online] Available at: http://www.investopedia.com/terms/a/audit-committee.asp#axzz1vlrwpp2o [Accessed: 14 Jun 2012]. * MouMou (2012) Advantages and disadvantages of having an audit committee.. [online] Available at: http://studentyard.net/?p=846 [Accessed: 14 Jun 2012]. * Putra (2008) Difference and Similarities of Internal Auditor Vs. External Auditor | Accounting-Financial-Tax.com. [online] Available at: http://accounting-financial-tax.com/2008/08/differences-and-similarities-of-internal-auditor-v-external-auditor/ [Accessed: 14 Jun 2012]. * Unknown. (2012) Control Environment. [online] Available at: http://www.fso.arizona.edu/internalcontrol/Control_Environment.pdf [Accessed: 14 Jun 2012]. * Unknown. (2012) Fraud. [online] Available at: http://www2.accaglobal.com/pubs/hongkong/students/newsupdate/archive/2011/30/fraud.pdf [Accessed: 14 Jun 2012]. * Book title: auditing and assurance services, A systematic approach, 6th edition,Authors: William F. Messier, Jr. Professor Steven M. Glover, Professor Douglas F. Prawitt