Pertemuan 4 Audit ACCA

Which TWO of the following statements describe the main advantages of establishing an

audit committee?

• The position of the internal audit department will be strengthened within the organisation.

• Corporate governance will be enhanced as the board of directors will report to the audit

  committee.

• The effectiveness of the internal audit department will be improved as the audit committee

  will monitor and review its performance on a regular basis.

• The workload of the internal audit department will be better managed as the audit

  committee will be able to minimise the extent to which the external auditors rely on the

  work of the internal auditors.

Once established, the audit committee will have many objectives.

Which of the following does NOT form part of the audit committee's objectives?

• Safeguarding the privacy of whistleblowers

• Appointing the external auditor

• Monitoring the independence of the external auditor

• Implementing a policy on the supply of non-audit services by the external auditor

Which of the following statements best describes why having an audit committee could

help Conoy raise additional finance by addressing the concerns of the bank?

• The independent non-executive members of the audit committee can provide guarantees

  to the bank concerning Conoy's financial viability.

• The audit committee will have at least one member who has relevant financial experience.

  This person will be able to stand in as Conoy's finance director before a new finance

  director is appointed.

• The audit committee will have at least one member who has relevant financial experience,

  so that they can monitor the integrity of the financial statements.

• The audit committee will review all the available evidence to substantiate information in

  financial reporting, thus improving the credibility of the financial statements.

Which of the following features are corporate governance weaknesses which Tangerine Co

would need to address prior to their listing?

(1) The chairman has sole responsibility for liaising with shareholders.

(2) The company has not established an internal audit function.

(3) The chairman and one of the NEDs are former executive directors of Tangerine Co.

• 1 and 2 only

• 1 and 3 only

• 2 and 3 only

• 1, 2 and 3

All the directors have been members of the board for at least four years.

• The directors should be subject to annual

  re-election

• The directors must be reappointed

  annually by the chairman

The board is comprised of six executive and four non-executive directors.

• At least 50% of the board, excluding the

  Chair, must be comprised of nonexecutive

  directors whom the board

  considers to be independent

• At least 75% of the board must be

  comprised of executive directors

The audit engagement partner has assessed the make-up of the audit committee.

Which of the following would be valid conclusions from this assessment?

(1) It is acceptable for the chairman to chair the audit committee.

(2) A new member of the audit committee with relevant financial experience must be

recruited.

• 1 Only

• 2 Only

• 1 and 2

• Neither 1 nor 2

The audit committee should be made up of independent nonexecutive directors

• True

• False

The audit committee normally appoints the external auditors at the

AGM

• True

• False

The audit committee monitors and reviews the internal audit

function

• True

• False