AUI4862
Assignment 2
(COMPLETE
ANSWERS) 2025
NO PLAGIARISM
[DATE]
[COMPANY NAME]
[Company address]
, ABC Limited has a well-established internal audit function (IAF), which
employs risk-based auditing. The IAF has reviewed the risk assessment
processes conducted by the risk management department and decided after
consultation with the audit committee of ABC Limited to rely on the risk
assessments performed by that department. The IAF is preparing an internal
audit plan for the next three years based on the risk register provided by the
risk management department. Only four (4) internal audits can be performed
in each year owing to two of the internal auditors being on maternity leave.
REQUIRED MARKS 2.6 Based on the information in the case study, compile a
list of the order in which the risks will be audited over the next three (3)
years. Provide an explanation for your answer. QUESTION 1 25 marks Part A
The Holiday Factory (Pty) Ltd, is a manufacturing company in the marine
engineering sector. The Memorandum of Incorporation contains, among
other things, the following clause:
Prioritizing Internal Audits for ABC Limited (2025–2027)
1. Introduction
ABC Limited's internal audit function (IAF) plans to rely on the risk assessments conducted by
the risk management department to develop its internal audit plan for the next three years. Given
the constraint of conducting only four audits per year due to staffing limitations, it is essential to
prioritize audits based on the risk register provided by the risk management department.
2. Risk Assessment and Prioritization
The risk register categorizes risks based on their likelihood and impact, typically using a risk
matrix. Risks in the upper right quadrant (high likelihood, high impact) are considered the most
critical and should be prioritized for auditing. Medium-risk areas might be audited biennially,
while low-risk areas could be audited every three years or included in a rotational audit schedule.
internalauditguide.com -+1Wolters Kluwer+1Wolters Kluwer+1internalauditguide.com -
+1SuperfastCPA
3. Proposed Audit Schedule
Based on the risk assessment, the following audit schedule is proposed:
2025:
o Audit 1: High-risk area 1
o Audit 2: High-risk area 2
o Audit 3: Medium-risk area 1
Assignment 2
(COMPLETE
ANSWERS) 2025
NO PLAGIARISM
[DATE]
[COMPANY NAME]
[Company address]
, ABC Limited has a well-established internal audit function (IAF), which
employs risk-based auditing. The IAF has reviewed the risk assessment
processes conducted by the risk management department and decided after
consultation with the audit committee of ABC Limited to rely on the risk
assessments performed by that department. The IAF is preparing an internal
audit plan for the next three years based on the risk register provided by the
risk management department. Only four (4) internal audits can be performed
in each year owing to two of the internal auditors being on maternity leave.
REQUIRED MARKS 2.6 Based on the information in the case study, compile a
list of the order in which the risks will be audited over the next three (3)
years. Provide an explanation for your answer. QUESTION 1 25 marks Part A
The Holiday Factory (Pty) Ltd, is a manufacturing company in the marine
engineering sector. The Memorandum of Incorporation contains, among
other things, the following clause:
Prioritizing Internal Audits for ABC Limited (2025–2027)
1. Introduction
ABC Limited's internal audit function (IAF) plans to rely on the risk assessments conducted by
the risk management department to develop its internal audit plan for the next three years. Given
the constraint of conducting only four audits per year due to staffing limitations, it is essential to
prioritize audits based on the risk register provided by the risk management department.
2. Risk Assessment and Prioritization
The risk register categorizes risks based on their likelihood and impact, typically using a risk
matrix. Risks in the upper right quadrant (high likelihood, high impact) are considered the most
critical and should be prioritized for auditing. Medium-risk areas might be audited biennially,
while low-risk areas could be audited every three years or included in a rotational audit schedule.
internalauditguide.com -+1Wolters Kluwer+1Wolters Kluwer+1internalauditguide.com -
+1SuperfastCPA
3. Proposed Audit Schedule
Based on the risk assessment, the following audit schedule is proposed:
2025:
o Audit 1: High-risk area 1
o Audit 2: High-risk area 2
o Audit 3: Medium-risk area 1
