Question 1. The external auditor can rely on the work of the internal auditor subject to certain conditions being met. One of this relates to the internal auditor reporting to the audit committee rather than to management.
(i) Please explain as to why this is an important condition to be met
(ii) Provide three benefits of the audit committee in enhancing governance.
Question 2. In carrying out the audit of audit of Tom Ltd, you have evaluated the controls risks as high and that the existence of both inventory, accounts receivable, and accounts payable is at risk.
Identify two audit procedures you could use to test:
(a) the existence assertion for inventory
(b) the existence assertion for accounts payable.
(c) the existence assertion for accounts receivable.