Problem1. There are similarities and dissimilarity between the responsibilities of internal and external auditors. Both internal and external auditors have responsibilities relating to prevention, detection and reporting of fraud, for instance, but their responsibilities aren’t the same.
Both internal and external audit are part of organisation`s entire corporate governance arrangements. Sometimes, the responsibilities of internal auditors are out-sourced to external organisations.
(i) Describe the difference between the responsibilities of internal auditors and external auditors for the prevention, detection and reporting of fraud and error
(ii) What are the merits and demerits if an organisation decides to out-source the internal audit function?
(iii) List all the types of activities normally performed by internal audit departments.
Problem2. International standard of Auditing (ISA) 500 defines audit evidence as relevant and reliable information obtained by the auditor, sufficient in arriving at the conclusions on which he bases his opinion on financial statements.
(i) In brief describe what are relevant, sufficient and reliable audit evidences.
(ii) List all the three sources of audit evidence.