Established over three decades ago in 1985 by the visionary Ravinder Singh, TANN stands tall as a quality driven FMCG company. Its brand has evolved into a household name, synonymous with Bread & Bakery excellence, p

CS Professional · Internal and Forensic Audit · PYQS · June 2024
Established over three decades ago in 1985 by the visionary Ravinder Singh, TANN stands tall as a quality driven FMCG company. Its brand has evolved into a household name, synonymous with Bread & Bakery excellence, particularly dominating the markets of North India. Based in Jalandhar, its Head Office is the heartbeat of its operations, overseeing a network of 10 cutting-edge manufacturing plants strategically spread across North and Central India. TANN management has received a notice from State Pollution Control Department for submitting a compliance report on water and waste management systems implemented by the company. For compiling and submitting the required data, Raj who has worked as a head of preventive maintenance department (Machinery and pollution control equipment's) of the company for last three years has been entrusted the task. Considering his capability and experience in the said department, he has been asked to do audit environmental compliance of the company. Environmental audit will also help company to identify potential environmental risks (mainly water pollution) that may arise from their operations. For controlling water pollution, water treatment plant has been installed (supplied by firm owned by son of Raj). Raj was hesitant to carry out the entrusted task and requested management to assign the responsibility to some other person. In your opinion why Raj was hesitant to accept the given role ?

Answer & Explanation:

One of the significant challenges of internal audit is managing the conflict of interest. In large business houses, Internal auditors are employees of the company, and they are expected to report on the operations of the business objectively. However, auditors may be hesitant to report negative findings if it could jeopardise their job security or relationship with their colleagues. In this case also, one of the significant challenges of internal auditor is managing the conflict of interest. Mr. Raj was hesitant to accept the given role because of Conflict of interest.

Topics: Internal Audit

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