ASSIGNMENT ONE

Course Name : BPS 430 – Audit Practice and Performance Review

Due Date : 09th September, 2021

Instructions :

a) Answer ALL Questions

b) Marks will be awarded for neatness and innovation.
c) Answer should be typed at 1.5 line spacing on font 12 using Times New Roman.
d) All references should be acknowledged.
e) Lecturers Contact Details:
- Name – Bright Hatamba Ngandu
- Phone No. – 0977 414309
- Email – nabicdirector@yahoo.com
(A) QUESTION ONE: Toyota’s Recall Crisis

In August, 2019, the improper installation of an all-weather floor mat from an SUV into a
loaner Lexus sedan by a dealer led to the vehicle’s accelerator getting stuck, causing a
tragic, fatal accident and launching the most challenging crisis in Toyota’s history. This
iconic company, synonymous with safety and quality, was vilified by the American press,
the government, and expert witnesses to plaintiff lawyers. Details usually unworthy of
public attention, such as internal memos disagreeing over public relations strategy,
became smoking guns that convinced the press and the public that Toyota vehicles had
electronic problems causing runaway vehicles — and that the company was hiding this
from the public.

The National Highway Transportation Authority (NHTSA), the government arm

responsible for enforcing auto safety, came under attack for being too soft on Toyota. So
they did what any good American organization does when they are attacked: They got
tough and became enforcers. Ray LaHood, Secretary of Transportation, was the toughest,
accusing Toyota of being “safety deaf” and vowing to get to the bottom of all Toyota
defects that could endanger American citizens. He got help by paying NASA taxpayer
dollars to conduct a study that dragged on for 10 months to study Toyota electronics.

What did we learn on February 8, 2021 when the report came out? That there is
absolutely no evidence of sudden unintended acceleration caused by electronic problems
in Toyota vehicles. The only causes NASA found were improperly installed floor mats
and sticky gas pedals that can be slow to return. There has been only one documented
accident caused by the floor mats — the one involving the loaner Lexus, where the dealer
had used the wrong floor mat and failed to attach it properly with the provided restraining
clips — and there have been no documented cases of accidents caused by the very small
number of sticky pedals. Most accidents have been attributed to driver error.

We also learned that the NHTSA knew all along that the only problems were floor mats
and sticky pedals, but they had to go ahead with the NASA study to convince members of
Congress who believed electronics were the cause of sudden acceleration despite a total
lack of evidence to support that belief. Toyota’s name was dragged through the mud for
over a year, $1.5 million in taxpayer money was spent, and some of the brightest minds
 in American engineering were occupied for 10 months — just so that NHTSA could
prove they were right all along.

So who won in this debacle? Journalists who wrote speculative and poorly researched
sensational articles got a lot of internet hits. NHTSA got a lot of attention, a larger
budget, and a reputation for toughness. It remains to be seen whether the lawyers suing
Toyota will get anything. American drivers got a paranoid auto industry that will recall
vehicles at the drop of a hat. There will be some positive safety policies relating to how
runaway cars are shut off in an emergency, and we all may get “black boxes” that record
our recent driving actions. And Toyota got a crisis that drove it to reflect intensively and
to make dramatic changes to improve its responsiveness to customer concerns, so likely
will emerge stronger — but lost billions of dollars of value in the process.

It’s hard to believe that our roads are any safer at the end of this extended saga. For that
to happen, we would have to rethink the way we deal with safety in the U.S. A first step
might be the government and the media learning something from Toyota’s systematic
approach to problem solving. It starts with some patience in getting all the facts, then
prioritizing problems, then looking at them objectively to determine root causes, and
finally developing solutions based on the real problems. The NHTSA took a positive step
by objectively looking at the NASA data, concluding there was no evidence of
electronics problems in Toyota vehicles, and shifting its focus to the important problems
of distracted driving and pedal misapplication.

Required:

(a) Discuss the key risks in this case study. (10 Marks)

(b) Recommend actions to mitigate these risks. (10 Marks)

Total 20
marks

(B) QUESTION TWO

 Discuss the differences and commonalities in the;

a. Structure;

b. Reporting;

c. Operation;

d. Legal requirements and;

e. Audit Opinion.

Between Internal Audit and External Auditing

Total 20
Marks

Discuss the differences and commonalities between Internal Audit and External Auditing in
in terms of Structure; Reporting; Operation; Legal requirements and Audit Opinion.