ACCA · Question 12 · Internal Control
SECTION A - CASE 3: GLOBAL WATER INITIATIVE
SCENARIO:
Global Water Initiative (GWI) is an international NGO providing clean water solutions in developing nations. You are advising the board on corporate governance and internal audit. GWI currently does not have an internal audit department. The board consists of the CEO, the CFO, and two non-executive directors (NEDs), one of whom is the CEO's brother. GWI receives significant grant funding, which requires strict compliance with donor conditions. Recently, a whistleblower alleged that procurement contracts in a regional office were awarded to a company owned by the regional director.
QUESTION:
Which of the following factors from the scenario provides the strongest justification for GWI to establish an internal audit department?
Answer options:
The board consists of only four members.
The strict compliance required by grant funding and the recent whistleblower allegations of fraud.
The fact that GWI operates in developing nations.
The lack of independence of one of the non-executive directors.
18 questions · hints · full answers · grading
Expert