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Master of Business Administration - MBA Semester 3
MF0013-Internal Audit & Control-4 Credits
(Book ID: 1733)
Assignment (60 Marks)
Note: Answers for 10 marks questions should be approximately of 400
words. Each question is followed by evaluation scheme. Each Question
carries 10 marks 6 X 10=60.
Q1. Describe & explain the term auditing. Personal qualities of an
auditor are important for the successful conduct of audit. Comment
Answer. Auditing is defined as a systematic and independent examination of
data, statements, records, operations and performances (financial or
otherwise) of an enterprise for a stated purpose. In any auditing the auditor
perceives and recognizes the propositions before him for examination, collects
evidence, evaluates the same and on this basis formulates his judgment which
is communicated through his audit report.

Q2. Write the key objectives of a good internal audit system. Narrate
the points of dissimilarities b/w external & internal audit.
Answer. Five key objectives for in-demand internal auditors:
1. Looking forward. One part of internal audits job is to test past transactions
to discover problems and control issues. As said its important also to look
forward, anticipate risks, and help navigate the potentially choppy waters on
the horizon.
The CAE can structure audit work to have more relevance in the executive
suite to assist organizations with being profitable, providing good customer
service, and staying in compliance, Smiechewicz said.

Q3. Give the role of internal auditor in the company management. List
down the duties of auditor under section 581ZG.
Answer. Major roles and responsibilities of internal audit function are:
Evaluates and provides reasonable assurance that risk management,
control, and governance systems are functioning as intended and will
enable the organizations objectives and goals to be met
reports risk management issues and internal controls deficiencies
identified directly to the audit committee and provides recommendations
for improving the organizations operations, in terms of both efficient and
effective performance

Q4. The effectiveness of the internal control system can be ensured if

the important aspects of the companys operations are kept in mind.
Explain the characteristics of an effective internal control system.
Write the elements of internal control.
Answer. The Characteristics of Effective Internal Control:
1. Control Environment
The control environment is the company's attitude toward internal controls.
Known as "tone-at-the-top," the control environment is a necessary condition
for effective internal control, because even the best-designed systems can be
thwarted if management overrides the controls that are in place.

Q5. Describe general EDP controls. Explain the appraisal of

accounting system & related internal control.
Answer. Electronic Data Processing (EDP) can refer to the use of
automated methods to process commercial data. Typically, this uses relatively
simple, repetitive activities to process large volumes of similar information. For
example: stock updates applied to an inventory, banking transactions applied
to account and customer master files, booking and ticketing transactions to an
airline's reservation system, billing for utility services.

Q6. Explain the internal control system in insurance companies. Write

down about the reporting internal control weakness.

Internal Control is a continuous set of processes carried out by an entitys

board of directors, management and all personnel, designed to provide
reasonable assurance of:
Effectiveness and efficiency of operations.
Reliability of financial and non-financial information.

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