Candidates were required discuss the benefits to the company in the scenario of establishing an internal audit department.

The question was worth 8 marks. The marking scheme allowed for 1 point for explaining one benefit of internal audit and a further mark for relating this to the scenario information. In practice, almost all candidates provided a list of benefits of internal audit with little or no reference to the scenario, effectively limited marks to 1 out of 2.

However, there was no limit to the number of points that could be made in this section so many candidates still obtained a good pass standard by explaining say 6 or 7 benefits of internal audit in generic terms only.

Example comments provided and reasons why those comments did not obtain a pass standard are noted below:

Answer comment
“Internal audit can help establish the internal control system for management.”

Examiners assessment of comment
This point is technically incorrect; internal audit help to monitor and recommend improvements to the system; establishing the system immediately provides a self-review threat. This point along with duplication of internal control points mentioned below was extremely common.

Answer comment
“Internal audit will help decrease the cost of external audit”.

Examiners assessment of comment
The point is correct; however, there is no mention of how the cost reduction will actually happen.

Addition detail is therefore needed to discuss this benefit.

Other common errors included:
• Repeating points already made. For example, a significant minority of candidates mentioned internal audit and internal control monitoring more than once; obviously only one mark was allowed for this duplication.
• Explaining the work of an audit committee such as recommending auditor appointment. These points did not meet the question requirement and so were not relevant.
• Explaining the problems of establishing an internal audit department. Again, these points did not meet the question requirement and so were not relevant.
• Explaining the benefits of internal audit rather than outsourcing. These comments did not focus precisely on the question requirement regarding the benefits of internal audit to the company in the scenario.

The overall standard of answers was satisfactory. As noted above, most candidates obtained a pass standard by stating generic points about the benefits of internal audit. It was pleasing the find the odd candidate making use of the scenario and providing valid reasons for an internal audit department from the scenario.