Aud679 Test - May2021 - Sem Aug 21

CONFIDENTIAL AC/TEST1/MAY2021/AUD679
UNIVERSITI TEKNOLOGI MARA

TEST 1
COURSE : INTERNAL AUDITING
COURSE CODE : AUD 679
EXAMINATION : 19 MAY 2021
TIME : 2.30 PM – 4.00 PM
SEMESTER : MARCH 2021– AUGUST 2021
INSTRUCTIONS TO CANDIDATES
1. Answer ALL questions.
2. No Plagiarism.
DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

This examination paper consists of 4 printed pages
1
QUESTION 1
An internal auditor acts as management controls and performs independent checks on the
control system in an organization. In Malaysia, it is a requirement for public listed companies
to have an internal audit function. This requirement has also extended to regulatory bodies
and government agencies. Internal auditors co-exist with other stakeholders especially
external auditor in order to maintain a harmonious working environment.
Required:
a. State any four (4) types of internal auditing engagement.

(4 marks)
b. Explain two (2) pro and challenges each in relationship between internal and
external auditor.
(6 marks)
c. Discuss the differences between internal and external auditor in relation to the below
features:
i. Responsibility towards fraud

ii. Independence
(10 marks)
(Total: 20 marks)
QUESTION 2
The Malaysian Code on Corporate Governance 2017 (MCGG 2017) specifically targets
companies listed on Bursa Malaysia. All companies however encouraged to adopt the
principles and recommendations introduced by the MCCG 2017 and make good corporate
governance an integral part of their business dealings and culture.
Required:
a. List four (4) roles of internal auditor in corporate governance.

(4 marks)
b. Explain briefly three (3) roles of internal auditor in risk management.
(6 marks)
c. Among the highlights of the MCCG 2017 are:
“Chairman of the board and CEO to be separate person”.
“The board of large companies will need to comprise at least 30% women directors’
“Companies with large numbers of shareholders or have meetings in remote

locations to leverage on technology”
“Disclosure of senior management remuneration”
2
Required:
Discuss the significance of the above highlighted areas in MCCG2017. (You may
give example for each of the explanation).
(10 marks)
(Total: 20 marks)
QUESTION 3
You as the Chief Audit Executive (CAE) in charge of Asli Medic Sdn Bhd (Asli Medic). In
planning the audit for the year ended 31 December 2020, you are required to assess the
audit risks of Asli Medic and the following information was made available to you:
Asli Medic Sdn Bhd is a small and medium (SME) company that is directly involved in
supplying linen-based products such as cubicle curtain, isolation gown, mattress protector,
scrub suit, patient gown, and others for the use by government and private hospitals in the
south Malaysia. This company is given instructions from the government concession to
continue operating throughout this movement control order (MCO) were made to meet the
demand for hospital supplies especially during the number of Covid-19 patients. According
to En. Ibrahim, Asli Medic’ director, the period of this control order is an important period
because the hospital needs adequate supply of linen, especially the use for the "Covid-19"
department.
The linen-based products are supplied by Asli Medic to both private and government
hospitals on credit terms. Due to the repercussion of Covid-19, the collections from the
government are relatively slow. Asli Medic has trade receivables balance that is material to
the financial statements.
In the following year, the directors plan to expand the range of goods sold through the
internet division to include luxurious home bedding product. The director believes the firm
may incur high initial operating costs when products are sold on the internet.
The management of Asli Medic plans to expand its business overseas, particularly in
Singapore and Indonesia in its future plan. This plan was made as a strategic plan few years
before the pandemic strike. As part of the plan, the management is looking into the
upgrading of its accounting system to artificial intelligence (AI) to help further automate and
streamline the book-keeping task. The management is of the view that with the
implementation of AI accounting system, staff cost can be reduced substantially.
To perform the audit, you are reviewing Asli Medic’s internal control systems. Apart from
using The IIA's International Standards for the Professional Practice of Internal Auditing,
you also referring to COSO-Internal Control framework for your audit purpose.
Required:
a. Define Internal Control as suggested by COSO and its components.

(4 marks)
b. Explain three (3) inherent limitations of controls that will constraint internal auditor from
giving absolute assurance that the control objectives of an organization will be met.
3
(6 marks)
c. Explain four (4) possible risks factors associated with the audit of Asli Medic Sdn Bhd.
(You answer should include the impact and recommendation to address those risks).
Present your answer as per table below.)
Risk Impact Recommendation
(10 marks)
(Total: 20 marks)
Total Marks: 60 marks
“Yesterday I was clever, so I wanted to change the world. Today I am wise, so I am

changing myself.”- Rumi

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CONFIDENTIAL AC/TEST1/MAY2021/AUD679

UNIVERSITI TEKNOLOGI MARA

COURSE : INTERNAL AUDITING

COURSE CODE : AUD 679

EXAMINATION : 19 MAY 2021

TIME : 2.30 PM – 4.00 PM

SEMESTER : MARCH 2021– AUGUST 2021

1. Answer ALL questions.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

a. State any four (4) types of internal auditing engagement.

i. Responsibility towards fraud

a. List four (4) roles of internal auditor in corporate governance.

b. Explain briefly three (3) roles of internal auditor in risk management.

“Chairman of the board and CEO to be separate person”.

“Companies with large numbers of shareholders or have meetings in remote

“Disclosure of senior management remuneration”

a. Define Internal Control as suggested by COSO and its components.

Risk Impact Recommendation

“Yesterday I was clever, so I wanted to change the world. Today I am wise, so I am

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