ACCA · Question 14 · 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:
If GWI decides to outsource its new internal audit function to an external firm of accountants, which of the following is a primary advantage of this approach?
Answer options:
The external firm will have a deeper day-to-day understanding of GWI's unique organizational culture than an in-house team.
It guarantees that no fraud will occur in the future.
Immediate access to a broad range of specialized skills and established audit methodologies.
The external firm can also take over management's responsibility for implementing internal controls.
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