Question：Ideally, who should the internal audit department report to?
A. The chief accountant.
B. The Audit Committee.
C. The Board of Directors.
D. The external auditor.
The correct answer is: The Audit Committee.
Ideally, the internal audit department should report to the Audit Committee. If there is no Audit Committee they should report to the Board of Directors. They do not report to the external auditor as they are employees of the client and they should not report to the chief accountant as the majority of work they perform will be within his department. Reporting to the chief accountant would impair their independence.
Question：If an auditor discovers fraud in the course of a statutory audit which of the following would be the least acceptable outcome?
A. The fraud is clearly disclosed in the financial statements.
B. The auditor reports the fraud to the appropriate regulatory agency.
C. The audit report is modified on the grounds that the manipulation required to conceal the fraud undermines the truth and fairness of the financial statements.
D. The directors report the matter to the appropriate regulatory agency.
The correct answer is: The auditor reports the fraud to the appropriate regulatory agency.
The auditor reporting the fraud to a third party will always be seen as a last resort. Making such a report involves breach of the professional duty of confidentiality and so could lead the auditor open to accusations of unprofessional behaviour. There may also be the risk of claims that the auditors' report was defamatory.
，我們將會及時處理。