Solution Essays

1577 Words7 Pages
Role of Internal Audit Function

Nano Circuits Inc, is a publicly traded company that produces electronic control circuits, which are used in many products. In an effort to comply with SOX, Nano is in the process of establishing an in-house internal audit function, which previously had been outsourced. The company began this process by hiring a Director of Internal Audits. Nano Circuits’ CEO recently called a planning meeting to discuss the roles of key corporate participants regarding the implementation and maintenance of internal controls. Central to this decision is the organizational placement of the future internal audit function and to whom the new Director of Internal Audit should report. In addition, Nano Circuits considered
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On the other hand, audit committee, selected by the board, represents the interest of shareholders who are highly motivated to discover any deficiencies in operation. Admittedly, senior managements have the right to know the result of internal audit and accommodate recommendations by internal auditors.

c. Comment on the audit committee member’s perspective as to the committee’s current composition.

The audit committee member’s perspective as to the committee’s current composition is problematic. According to SOX 2002, as least one member of the audit committee should be a financial expert. Thus, changes must be made to the current composition of the committee. Even if all committee members obtain extensive industry experience, without professional accounting knowledge, they are unlikely to detect misstatements and frauds caused by the deficiencies in the internal control system. The existence and appearance of at least one financial expert is necessary.

Internal Auditor Independence

Technical Solutions, Inc is expanding and reorganizing its Internal Audit (IA) function. Currently the Director of Internal Audit, Sharon Kalafut, reports to the corporate controller, who receives and reviews all internal audit reports. Kalafut forwards copies of the internal audit reports to the audit committee of the board of directors and to the manager directly responsible
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