Bijaksana Sdn Bhd (BSB) manufactures computer parts and employs 300 staffs and able to achieve net...

 

Transcribed Image Text:

Bijaksana Sdn Bhd (BSB) manufactures computer parts and employs 300 staffs and able to achieve net profit of 20% to 30% consistently. BSB is a family-owned business which hold by five individuals. There is no non-executive directors as the shareholders think that this is not necessary. All the shareholders are the executive directors and they managing BSB successfully. BSB does have an internal audit department which mainly focus on the internal control systems not financial reporting as the directors think that financial reporting areas are not under the scopes of internal audit. The directors are keen to follow principles of good corporate governance and they think that internal audit department is essential to achieve this. Garuda & Co, the external auditor of have expressed the concerns that BSB did not fully utilised the internal audit functions and suggested BSB to outsource the internal audit department to save the costs. Besides, Garuda & Co also suggested to the Board that BSB should establish an audit committee in order to follow good corporate governance. REQUIRED: Explain the FOUR (4) functions internal audit department since the directors of BSB mentioned that internal audit only focusses on internal control systems (a) (b) (c) (8 marks) Discuss any TWO (2) reasons for and against having an audit committee in BSB and outsourcing the internal audit of BSB. (8 marks) Explain any TWO (2) advantages and disadvantages of outsourcing the internal audit of BSB. (9 marks) Bijaksana Sdn Bhd (BSB) manufactures computer parts and employs 300 staffs and able to achieve net profit of 20% to 30% consistently. BSB is a family-owned business which hold by five individuals. There is no non-executive directors as the shareholders think that this is not necessary. All the shareholders are the executive directors and they managing BSB successfully. BSB does have an internal audit department which mainly focus on the internal control systems not financial reporting as the directors think that financial reporting areas are not under the scopes of internal audit. The directors are keen to follow principles of good corporate governance and they think that internal audit department is essential to achieve this. Garuda & Co, the external auditor of have expressed the concerns that BSB did not fully utilised the internal audit functions and suggested BSB to outsource the internal audit department to save the costs. Besides, Garuda & Co also suggested to the Board that BSB should establish an audit committee in order to follow good corporate governance. REQUIRED: Explain the FOUR (4) functions internal audit department since the directors of BSB mentioned that internal audit only focusses on internal control systems (a) (b) (c) (8 marks) Discuss any TWO (2) reasons for and against having an audit committee in BSB and outsourcing the internal audit of BSB. (8 marks) Explain any TWO (2) advantages and disadvantages of outsourcing the internal audit of BSB. (9 marks)

Answer rating: 100% (QA)

a The four functions of an internal audit department are to provide assurance on the effectiveness of an organizations risk management control and gov... View the full answer