Question 1: Corporate governance is a main area for auditors to understand as this now gives impetus to the role of internal audit. Corporate governance mainly concerns the way that a company is operated and directed, and in specific encompasses the operation of the board and audit committee, and also the overall control and risk management framework.
Required:
a) Why has corporate governance had such an impact on the internal audit?
Question 2: UTM Hotels is a listed company that runs a chain of some 40 hotels. The company has an established internal audit department that is based at the head office and that makes regular visits to the hotels.
The hotels give business and tourist class accommodation. They as well provide restaurants, bars, conference and leisure facilities that are open to the general public and also residents. The company operates a computerized central booking and billing system and a stock and asset control system, both of which can accessed through terminals in the hotels. Access to the system is restricted by the use of password and all important expenses are authorized via head office. The payroll is operated via head office. Hotel and regional managers are actively included in the setting of budgets and cash flow forecasting. On average, all through the year, the chain has a 65% occupancy rate.
Required:
a) Explain six areas in which the internal audit department at UTM Hotels might check detailed transactions and balances.
b) Explain four areas in which the internal audit department at UTM Hotels might carry out reviews of system or the operational performance.