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In an organisation which operates a good system of corporate governance, to whom should the
external audit department of an organisation report?
A The Board of Directors
B The Finance Director
C The Audit Committee
D The shareholdersD is the correct answer.. External audit department of an organisation report to shareholders.
What do you want from me? Don’t you have the answer to this question in your revision kit?
As written in Kaplan , external auditor should report to the audit committee which acts as an interface between Auditors and BOD
So why is this D?The external auditors ultimately report to the shareholders (or members). The auditors might at some point liaise with the audit committee and, indeed, furnish the committee and the board with, for example, reports on internal control problems. However, the prime purpose of external auditors is to report to the members/shareholders on whether the financial statements show a true and fair view. This opinion is given in the Audit Report.
So, if a question like this comes where it’s unclear if they are asking about the fraud reporting or internal control reporting, what should be the answer?
thanks for your help! sir.
If a question is unclear it is unclear for everyone, including me. Nobody knows what the examiner wants so you have to go for the option you think is correct or best.
Real ACCA questions are thoroughly scrutinised so it is very unlikely that there will be an ambiguous question.
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