QUESTION 3
a) Explain whether each of the scenarios is permissible in terms of the Code of Ethics
b) Discuss the role of the audit committee, King codes in ensuring governance in an
organization of your choice
c) Critically analyse the role and place of the internal audit activity in the
organisational plan of an organization. Use examples
a) Without specific scenarios provided, it is difficult to determine their permissibility in terms of the Code of Ethics. Generally, the Code of Ethics for professionals, such as auditors, includes principles of integrity, objectivity, confidentiality, and professional behavior. Any scenario that violates these principles would likely not be permissible.
b) The audit committee plays a critical role in ensuring good governance in an organization. The audit committee is typically composed of non-executive members of the board of directors who oversee financial reporting, internal controls, and external audit processes. They provide independent oversight of the organization's financial reporting process and ensure compliance with regulatory requirements.
In South Africa, the King codes of Corporate Governance provide a framework for corporate governance practices. The King IV Code emphasizes the importance of ethical leadership, transparency, and stakeholder inclusivity. By following the principles outlined in the King codes, organizations can strengthen their governance practices and build trust with stakeholders.
c) The internal audit activity plays a key role in providing independent assurance on the effectiveness of an organization's risk management, control, and governance processes. Internal auditors assess the organization's operations to identify potential risks and provide recommendations for improvement.
Incorporating the internal audit activity into the organizational plan can help in identifying weaknesses in processes and controls, reducing the risk of fraud and errors, and improving overall organizational performance. For example, internal auditors can conduct regular audits of financial transactions to ensure compliance with policies and procedures.
Overall, the internal audit function should be an integral part of an organization's governance structure, providing an objective and independent assessment of the organization's operations. By integrating internal audit activities into their organizational plans, companies can strengthen their risk management practices and ensure compliance with regulations.