Last week, you attended the wedding of an old-school friend. At the ceremony, you were seated next

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Question:

Last week, you attended the wedding of an old-school friend. At the ceremony, you were seated next to the Vice-President of Marketing for a large Canadian company. During your conversation with him, he asked you what position you held in your company. When you replied that you were employed as a Public Accountant (External Auditor) at a local public accounting firm, the Vice-President replied the following:

"I do not quite understand what the difference is between External Auditors (Public Accountants) and Internal Auditors. It seems to me that a well managed company does not need to have an Internal Audit Function. Also, I am bit confused on the different types of audits that an Auditor can perform. I have heard that Auditors commonly perform Financial Statement, Compliance and Operational Audit Engagements. Is this true? If so, what are the differences between these types of audits?".

Since you didn't have time to fully explain and respond to the Vice-President at that time, you suggest that you will take the Vice-President's business card and prepare an e-mail to him to address his questions.

REQUIRED

a) Explain the purpose of External Auditing and Internal Auditing. As part of your response, explain the key differences between External Auditing and Internal Auditing.

b) Provide an explanation to the Vice President of the differences between a Financial Statement, Compliance and Operational Audit Engagement.

c) Provide an example of each type of audit (i.e Financial Statement, Compliance and Operational Audit Engagement) that can help the Vice-President understand the purpose of each engagement.