Current budgets - definition

Revision question on internal uditing NBAA May 2019

Saluti is a limited liability company engaged in the manufacturing and selling of high-quality garments. At the beginning of 2018 Saluti’s Board of Directors decided to list 80% of its shares on the Dar es Salaam Stock Exchange. The listing was completed by the end of 2018. The management of Saluti has been advised by the external auditors about the need for compliance with the corporate governance code and the internal audit function. Saluti’s Board of Directors’ structure comprises seven executive directors and two non-executive directors. Saluti has approached the following two persons to request them to join the board as non-executive directors: 1. Ms Herieth – She is currently the marketing director of a multinational company and the sister of Mr. Meremeta, Chief Executive Director of Saluti Company ltd. 2. Mr. Hassan – He is currently the Chief Operation Officer of a listed Company and former manager of operations of Saluti Company ltd. He left Saluti on 30th November 2017. Salute also intends to form the audit committee. It intends to appoint Ms. Kasheshe who is currently the finance director of Saluti to be the Chairperson of the Audit Committee, as she is a Fellow Certified Public Accountant.

REQUIRED:

(i) Identify any four deficiencies in the Saluti’s Board structure and proposed new non-executive directors.

(ii) Explain the suitability of Ms. Kasheshe to serve as the Chairperson of the Audit Committee.

(iii) State any four factors an entity might consider when assessing the need for an internal audit function.

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