The director of internal auditing for a state government drove into his parking spot in the basement of the capitol building. As he opened his door to get out, he heard one of his auditors yell from across the parking lot that the director of public safety had been trying to contact him for the last half-hour, and it was an emergency. When he arrived at his office a few minutes later, the director of auditing called to find out what the emergency was. It seems that the payroll checks for the department had been issued during the past two months with gross errors in them, often amounting to several thousands of dollars. The director of public safety had called the State Accounting Office to inquire why the errors had occurred and when the checks could be corrected. Personnel at the State Accounting Office said that a new computerized payroll system had been installed, and they were still working out the bugs, but they would correct any checks made out for the wrong amounts within a week. This promise had been made each of the last two months, and still the checks that were in error had not been corrected. The employees in public safety were complaining loudly. After calling the State Accounting Office and several other state offices to check for similar mistakes, the director of auditing decided an immediate audit was necessary, but all of his auditors were already on assignment, except for one threeman team which had been assigned to begin an audit of the State Tax Commission the following day.

Required:

a. Suppose the director of auditing decides to audit the State Accounting Office. What other steps would be necessary to prepare for this audit?

b. How do you suppose the director of auditing might decide whether or not to audit the State Accounting Office?

c. What kinds of skills would be most important for the audit team he assigns?

d. What kinds of problems may arise from postponing the audit of the State Tax Commission? (Integrate the ideas presented in Chapter 4.)