Assignment
You have refer to ACCA/MIA or other sources to support with your answer.
All question answers needed in lengthy explanation answer. Each question must support one example case.
Question I
"Internal audit is process improvement and optimisation," says ICAEW member Abigail Harper who sits on ICAEW's internal audit panel. She is an internal audit expert, specialising in the hospitality industry. "When you are looking at the control around due diligence for suppliers, you can use artificial intelligence to collect data, such as credit score ratings. Environmental, Social and Governance (ESG) questionnaires and queries around capacity and scalability to support growth plans, but a human can still decide. Thresholds and criteria can be built within systems that suppliers are automatically approved when met. However, there will always be instances where you have to discuss the exceptions and make decisions." This can be applied broadly - such as employee hiring scenarios or performing employee and supplier performance reviews. (Source: https://www.icaew.com)
Task
1. Discuss why auditors need to know information technology to support the auditor's judgment on the quality of data processed by computer systems.
2. Clarify the difficulties auditors are experiencing nowadays while performing an information technology audit. Provide your answer with ONE situation.
Question II
Khalish is the auditor of Bright Bhd. preparing the final audit for the year ended 30 September 2021 and reviewing the audit working papers. Two issues summarised from the review are as follows: Situation 1: During the year, Bright Bhd. was named as a defendant in a suit for damages by its main supplier, Sunny Sdn. Bhd. for breach of contract. In October 2021, an adverse decision to Bright Bhd. was rendered, and it is required to pay RM2 million sum of damages to Sunny Sdn. Bhd. Situation 2: Bright Bhd. has acquired a new subsidiary, Metal Sdn. Bhd. to supply construction materials. The acquisition was taken place in October 2021, and the first transaction between them was carried out in early November 2021. The management claim that they did not disclose the information on the acquisition and transaction since both activities were carried out after the balance sheet date. In addition, the management keeps on giving excuses when asked about the management's written representation. It is the only thing outstanding before the auditor's signed and dated report.
Task
1. Recommend three audit procedures to assess the existence of contingent liability in Bright Bhd.
2. Before Khalish completes the audit, critically analyse Bright Bhd.'s financial statements from situations 1 and 2.
3. Should the audit partner sign the auditor's report before obtaining the written representation from management?