Second Semester | AY 2020-2021
C-AE10_: Governance, Business Ethics, Risk Management & Internal Control
NAME: ____Anna Mikaella E. Elchico_______________________________________ DATE: FEBRUARY 24, 2021
Essay (36 points)
#1: Transparency and accountability are synonymous. State whether the statement is correct or not and explain your
answer. (5pts)
Transparency and accountability are not synonymous – these two words are completely different. Transparency
is where information is available and easily accessible. There is a free flow of information that can be used by the
stakeholders to make decisions. While, accountability is taking responsibility one’s actions.
#2: The audit committee reviewing with the external auditor any audit problems or difficulties that they had with
management. State how this policy is intended to help address the risk of fraud in organizations. (5pts)
An external auditor is not an auditor nor member of the management team, thus, conflict of interest would be
mitigated or eliminated. With the help of external auditor, organization will be able to objectively evaluate the company,
provide unbiased and professional opinion regarding the internal auditors report, which is very important for reinforcing
the credibility of a company’s financial statements and compliance with regulations. Users of financial statements usually
do not have enough knowledge to understand a company’s financial statements. Thus, they rely on the auditor’s
independent assessment. Moreover, having an independent external auditor maintains public trust and confidence in this
profession.
#3: What is the purpose of having an independent internal audit function in an organization? (5pts)
An independent internal auditor is expected to provide an unbiased and professional opinion with regards
effectiveness of internal controls within the company. The management rely on the auditor’s independent assessment.
Through independence, the professional accountant’s report enhances the credibility and reliability of information,
making it useful to the management for decision making. On the other hand, knowing that the audited information was
performed by an auditor who is not independent, information will be useless.
