Assignment
What You Want is a growing, privately held retail chain with 40 stores with collective annual sales in excess of $500 million. The president is planning to go public within three years and is considering adding an internal audit function even though the company is not publicly held. The president has requested that you provide a thorough discussion of:
• Should the company hire more than one person? If so, why?
• What types of skills or background should the company seek in an internal auditor in a retail operation and why?
• What would you suggest as at least five roles for the internal auditor in a retail company, exclusive of helping external auditors?
• Could the internal auditors perform work to help external auditors to reduce the fee? If so, what can they do and how much can they be relied upon?
• What criteria would you, as an external auditor, consider when deciding on whether you can rely on the work of internal auditors?
• What types of extra expenses, beyond salaries and office space, should the company consider for the internal audit function and why?
• To whom would the auditor report and why?
• What corporate governance issues should the company consider adopting to make effective use of the internal auditor and why?
• What role does the internal auditor play, if any, in Sarbanes-Oxley compliance?