For each of the above two areas, discuss; The objectives of the internal auditor; The objectives of the external auditor; and Whether the external auditor will rely on the internal auditor, and if reliance is required, the extent of that reliance.
ZPM is a listed limited liability company with a year end of June 30. ZPM’s main activity is selling home improvement of Do-It-Yourself (DIY) products to the public. Products sold range from nails, pain and tools to doors and showers: some stores also sell garden tools and furniture. Products are purchased from approximately 200 different suppliers. ZPM has 103 stores in eight different countries. ZPM has a well-staffed internal audit department, who report on regular basis to the audit committee. Areas where internal and external may carry out work include:
- Attending year-end inventory count in 30 stores. All are visited rotationally.
- Checking the internal controls over the procurement systems.
Required;
For each of the above two areas, discuss;
- The objectives of the internal auditor;
- The objectives of the external auditor; and
Whether the external auditor will rely on the internal auditor, and if reliance is required, the extent of that reliance.
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