Reference no: EM132283273

Scenario or Tasks

Task 01

You are employed as an internal auditor at Finch group, an organization involved in making B2B sale of products. Finch group employs a team of 50 sales executives, and they are assigned to different geographical territories. Sales executives are responsible for maintaining the existing contacts and to explore new business opportunities.

A team of internal auditors have been assigned to carry out an audit to review the internal control in the sales department.

Sales executives spend most of their working time in field work. They are provided with company car, fuel allowance and mobile phones. Further, the company meets the expenses of sales executives' accommodation, meals and the cost for entertaining the existing and potential customers. The sales executives are required to visit the head office once a month for reporting

The sales executives enjoy a lot of freedom and autonomy. The regional managers are not involved in inspecting the daily routine of sales executives unless otherwise if they are not satisfied with the performance of the sales executive. The sales executives' performance is appraised based on their achievement of monthly targets (the value of sales and the number of potential customers and existing customers).

The regional managers are responsible to provide a report monthly to the finance department containing the value and volume of business obtained by each sales representative. The finance department will analyse the performance of each sales executive by comparing it with the monthly expenses incurred for each sales executive. Finally, the analysis will be sent back to the regional managers for discussion.

During the audit the internal audit team has observed that the expenses incurred over the sales executives as a proportion to the sales revenue has been steadily increasing over the last three years. It is clearly apparent that the reason for increasing costs is due to lack of control over the sales executives and their expenses.

Requirement:

You are required to prepare a report to head of Internal Audit,

a) Informing the risk faced by FINCH GROUP as a result of lack of control over the activities of sales executives.

b) Recommending suitable controls that could be implemented by regional managers and finance department to streamline the activities.

Two marks will be awarded for the quality of presentation and language in the report

Task 02

Internal Audit Must Embrace Change or Sink Like a Stone By Jason Mefford

Here's a list of the internal audit challenges that present threats to the profession or cause sleepless nights for some CAEs. While it's hardly a comprehensive list, it includes some of the changes and trends that we internal auditors simply can't ignore.

Speed of Technology. Changing business models from technological advances are disrupting traditional organizations and just may be the existential threat to internal audit. Deeper knowledge and skills related to new technology used throughout the organization are needed, as well as understanding and adoption of technology tools for performing audits, such as robotic process automation (RPA), artificial intelligence (AI), and advanced analytics. As Karl Stingily, CAE of Caesars Entertainment said, "every auditor needs to have a basic understanding of IT, as it is embedded in every audit that
we perform."

Cybersecurity: Cybersecurity is a critical issue for nearly all boards and senior managers, and, whether you know it or not, they are looking to internal audit to make sure everything is "OK." Since cybersecurity is such a broad topic, and little direction is given on what internal audit is expected to do, scoping engagements is difficult.

Downgrades to the CAE Position: Some organizations are pushing down the CAE position from vice-president to director or from director to manager, leaving internal audit to report lower in the organizational hierarchy. This is bad news if internal audit is to maintain influence in the organization. This harsh reality increases the need for -internal audit to demonstrate value to senior management and the board, audit what matters most, and simply make the case for internal audit by achieving more "wins."

More Specialization: Increased technical and business skills are needed in internal audit,. leading to the death of the general auditor. Internal audit departments will likely see more experienced, technically savvy auditors making up most of the department.

Serving Two Masters: Internal audit has always had some challenge serving both the board and senior management-two groups that are not always aligned-and pull internal audit in different directions. The challenges around independence are real.

Talent Acquisition: Finding enough people to fill open positions and finding people with the right skills is a challenge in the current tight job market and could be for some time.

CAEs will need to be more creative, looking for candidates with non-traditional audit backgrounds and relying more on "guest auditors" to fill the gaps.

Talent Development: Training current employees in technical and soft-skills is a constant challenge for CAEs. And soft-skills, such as communication and emotional intelligence, are more important than ever. Auditors who can do the work, but have difficulty communicating the results, will find themselves out of a job.

Constant Justification: Nobody seems to care that last year you saved the organization millions of dollars. The "what have you done for me lately?" mentality requires CAEs to constantly justify their value to the organization, some of which is cost and risk avoidance that is difficult to calculate and quantify to the chief financial officer. Yet CAEs will need to prove return on investment to the organization or risk getting outsourced.

Sarbanes-Oxley: Immediately after the passage of the Sarbanes-Oxley Act (SOX) internal audit spent an inordinate amount of time doing lower-level work around SOX compliance. Over time, some of that work transitioned to others in the organization, but new requirements from the PCAOB, which have led to shifting expectations of the board and senior management, means internal audit is being pulled back, kicking and screaming, into SOX compliance work.

Requirement:

1. Above article is about the changes and trends that are challenges encountered by internal auditors. You are required to critically Evaluate the challenges faced by internal auditors using examples.
(Word limit - 500 words)

2. "Every auditor needs to have a basic understanding of IT, as it is embedded in every audit that we perform." - Karl Stingily, CAE of Caesars Entertainment.

Discuss the positive impact created by information technology on the performance of internal audit.

(Word limit - 350 words)

3. "Effective internal control, internal audit, audit committee and corporate governance are all inter-related. "

Illustrate how this interrelation contributes to the effectiveness of internal audit.

(Word limit - 600 words)

Two marks will be awarded for the quality of presentation and language in the report

The following factors will be considered when the lecturer assesses your report.

1. Understanding

You need to provide evidence of adequate knowledge in relevant area tested above and efficient application of theoretical knowledge to the given scenario.

2. Presentation
This being a professional presentation you should try to minimize the grammar errors

3. Clarity and structure
Your arguments should be organized in a clear and logical way.