QUESTION $2$

$24$ marks

$2.$ Conclude and explain, with reference to the IPPF $($Code of Ethics or Standards$),$ whether each of the unrelated scenarios below $(2\mathrm{.}1$ to $2\mathrm{.}6)$ is permissible or not permissible $($column $1).$ Quote the complete Rule of Conduct $($Code of ethics$)$ or IIA Standard $($not just the heading$)$ and a description of the Standard $($column $2)$ relevant to the scenario. Provide a reason to support each of your conclusions $($column $3).$ Your answer should be structured as follows:

$\backslash$table$[[$No$.,\backslash$table$[[$Permissible$/],[$Not permissible$],[(1$ mark$)]],\backslash$table$[[$Reference to IPPF$],[(2$ marks$)]],$Reason $(1$ mark$)],[,,,]]$

$2\mathrm{.}1$ In the review of the credit card reconciliations, the internal auditor realised that one of the manager's expenses on his credit card were used for personal expenses. The manager promised to pay back all the money spent on personal expenses and requested the internal auditor to not include the finding in his report. The manager undertook to pay back all the unauthorised amounts with interest. The internal auditor agreed to not include the finding in the report.

$2\mathrm{.}2$ The chief financial officer $($CFO$)$ held a meeting with the chief audit executive $($CAE$)$ regarding the cost structures and budget of the internal audit function. The CFO requested the CAE to cut and save organisational costs. Due to the cost saving drive, the CAE has cancelled all staff training for the next two years on the basis that cost saving is more beneficial to the organisation.

$2\mathrm{.}3$ The internal audit team has made observations and recommendations that should significantly improve the procurement department's efficiency and

$4$

AUI$2601/2/2024$

effectiveness. The chief operations officer $($COO$)$ presents the internal audit manager with a R$3000$ gift voucher to show his appreciation for the work done. The internal audit manager accepts the gift as he believed it is a kind gesture from the COO and the amount is not material.

$2\mathrm{.}4$ Mpho Xhosa, an internal auditor of Green Ltd has recently completed an internal audit engagement to evaluate the marketing department of Green Ltd$.$ Based on the experience gained during the marketing engagement, Mpho spends several hours one Sunday working as a volunteer consultant to a local hospital that intends conducting an evaluation of its marketing function to attract sponsorship.

$2\mathrm{.}5$ Sal Owusu has recently been appointed as a senior internal auditor. He has been assigned to the performance audit of the purchasing department. He is responsible to recalculate the reorder quantities. Due to time constraints and work pressure, he decided to accept the reorder quantities as correct. According to John the reorder quantities are not material and time should not be wasted on immaterial matters.

$2\mathrm{.}6$ The chief audit executive $($CAE$)$ received a request from the external auditors to make available all internal audit reports of the Finance and Information Technology departments to evaluate whether it is necessary to adjust their scope of work. The CAE stated that he is not able to share reports with external assurance, they should request copies from the chief financial officer $($CFO$)$ and the chief information officer $($CIO$)$ directly.