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Fall-2013 Master of Business Administration- MBA Semester 4 MF0013Internal Audit & Control-4 Credits (Book ID: 1733) Assignment (60 Marks) Note: Answers for 10 marks questions should be approximately of 400 words. Each question is followed by evaluation scheme. Each Question carries 10 marks 6 X 10=60. Q1. Describe & explain the term auditing. Personal qualities of an a uditor are important for the successful conduct of audit. Comment Answer. Auditing is defined as a systematic and independent examination of data, statements, records, operations and performances (financial or otherwise) of an enterprise for a stated purpose. In any auditing the auditor perceives and recognizes the propositions before him for examination, collects evidence, evaluates the same and on this basis formulates his judgment which is communicated through his audit report. Auditing is a vital part of accounting.

Q2. Write the key objectives of a good internal audit system. Narrate the points of dissimilarities b/w external & internal audit. Answer. Five key objectives for in-demand internal auditors: 1. Looking forward. One part of internal audits job is to test past transactions to discover problems and control issues. As said its important also to look forward, anticipate risks, and help navigate the potentially choppy waters on the horizon. The CAE can

Q3. Give the role of internal auditor in the company management. List down the duties of auditor under section 581ZG. Answer. Major roles and responsibilities of internal audit function are:

 Evaluates and provides reasonable assurance that risk management, control, and governance systems are functioning as intended and will enable the organizations objectives and goals to be met reports risk management issues and internal controls deficiencies identified directly to the audit committee and provides recommendations for improving the organizations operations, in terms of both efficient and effective performance evaluates information security and associated risk exposures evaluates regulatory

Q4. The effectiveness of the internal control system can be ensured if the important aspects of the companys operations are kept in mind. Explain the characteristics of an effective internal control system. Write the elements of internal control. Answer. The Characteristics of Effective Internal Control: 1. Control Environment The control environment is the company's attitude toward internal controls. Known as "tone-atthe-top," the control environment is a necessary condition for effective internal control, because even the best-designed systems can be thwarted if management overrides the controls that are in place.

Q5. Describe general EDP controls. Explain the appraisal of accounting system& related internal control. Answer. Electronic Data Processing (EDP) can refer to the use of automated methods to process commercial data. Typically, this uses relatively simple, repetitive activities to process large volumes of similar information. For example: stock updates applied to an inventory, banking transactions applied to account and customer master files, booking and ticketing transactions to an airline's reservation system, billing for utility services. Data is information and can include anything from alphanumeric characters to dates, equations, and multimedia. Data processing is one of the steps in the information processing cycle and comes after data is acquired, entered, and validated. This was originally done by individuals and incrementally, using punched

Q6. Explain the internal control system in insurance companies. Write down about the reporting internal control weakness. Answer. INTERNAL CONTROL:

Internal Control is a continuous set of processes carried out by a n entitys board of directors, management and all personnel, designed to provide reasonable assurance of: Effectiveness and efficiency of operations. Reliability of financial and non-financial information. An adequate control of risks. A prudent

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