Internal Audit Function

​​Premium Ltd. manufactures cleaning detergents for supermarkets and public institutions. The company recently implemented an integrated production and inventory system that automatically records movements of raw materials, work-in-progress and finished goods. The system calculates standard material usage for each production batch and permits authorised adjustments where wastage, spoilage or rework occurs. 

​​Apex Water Services Corporation is a county-owned entity responsible for supplying water to urban and rural households. The corporation is implementing a meter replacement project funded through the county budget. Internal audit reports indicate delayed follow-up of recommendations, weak monitoring of contractors and possible overpayments for meters that were never installed. The county executive committee has requested guidance on public sector roles, internal audit monitoring and possible recovery of public funds if irregularities are confirmed. 

​​Mavuno Ltd. is a rapidly expanding company whose internal audit function currently reports directly to the Finance Director and has recently identified several control weaknesses in the inventory system. The board is considering establishing an audit committee to strengthen oversight and corporate governance structures. The external auditor intends to rely on the work of the internal audit department during the current year’s audit. 

​​Johanna Ltd. aims to be listed in the Nairobi Securities Exchange. Benjamin Mutie is the chief executive officer and chairman of Johanna Ltd. He appoints and maintains a board of only five executive directors. While the board sets the performance targets for the senior management in the company, no formal targets are set for each director and no review of the board policies is carried out. 

​​Boresha Ltd. is a medium-sized manufacturing company. The company has recently established an internal audit function to help improve internal controls and operational efficiency. The head of internal audit currently reports directly to the Finance Director. The Finance Director has also asked the internal auditors to assist in the preparation of monthly management accounts and the review of year-end financial statements before they are submitted to the external auditors. 

​​Describe FOUR types of audits that an internal auditor might conduct.

​​Kezzia Karimi has recently been appointed as the head of internal audit function in one of the Government Entities. The entity has never had an internal audit function. In this regard, Kezzia has the responsibility of developing an audit charter for approval by the Audit Committee.

Required:
Advise Kezzia on four matters for inclusion to the audit charter to ensure independence of the internal audit function.

​​Evaluate three benefits of an audit committee in a not-for-profit organisation (NGO)