Share
Explore BrainMass

Internal Audit Management

Support the answers with quotes from scholars' publications and other articles. Express your opinion on the subject of the question in a separate paragraph that should be titled 'My Opinion'.

1. Internal control elements vary in their design and application under the manual systems versus the electronic systems. List, describe, compare, contrast, and argue five main different examples of those control elements.

2. The literatures have discussed the pros and cons for outsourcing internal audit. List at least 3 reasons for, and 3 reasons against outsourcing of internal audit. Express your opinion in a separate paragraph.

3. A number of scholars argue that internal auditors and the audit organization must be independent. Others stated that the auditors and the organization are integral part of the company and achieving independence is impossible; consequently the internal audit function is not as effective as the external audit function. Discuss the above statements and express and support your opinion.

Solution Preview

Internal Audit: Operational and Management

Support the answers with quotes from scholars' publications and other articles. Express your opinion on the subject of the question in a separate paragraph that should be titled 'My Opinion'.

1. Internal control elements vary in their design and application under the manual systems versus the electronic systems. List, describe, compare, contrast, and argue five main different examples of those control elements.

Internal control elements in the manual system mean understanding the activities. Are there segregation of duties? For instance, there should be a different person that records the cash transactions and another person that keeps custody of cash. is there a retention of records? The example of the manual internal control element is the keeping of documents in a safe and secure place.. Is there proper authorization of transaction? An example is that the physical signature of the supervisor is required on very voucher for making cash payments. What is the level of monitoring of operations? The example of internal control is direct supervision of all operational activities Are there physical safeguards? An example of manual internal control is the system of locks and security of the physical inventory.

Internal control measures in the electronic system are different from those of the manual system. Is there proper authorization? We consider an example, the access of the business and data is only given to users who have been authorized by their superiors. What is the approval process? An example of the internal control measure is the appointment of a departmental security administrator. What are the safeguards? (security measures). An example is the implementation of security measures to protect access to electronic resources and private information accounting. How is data integrity established? One example of bringing about data integrity is to validate the data with data warehouse. How does one confirm is the transactions are recorded correctly/retrieved properly/not altered? One example of checking this internal control is to follow retention schedules and data retention requirements (2).

There are differences in the electronic and manual system in establishing say the existence function. In case of the electronic system there are internal control measures like restricting access, periodic review of information, and testing of internal processes is carried out. Similarly, to establish the occurrence objective, the approval hierarchies are set up and limiting the use and access of the system to ensure occurrence. To ensure completion, the purpose of access is restricted, data entry and integrity rules are implemented, and data custodians are required ...

Solution Summary

Internal Audit Management is discussed in great detail in this solution.

$2.19