3 Susan Paullaos was recently appointed as a non-executive member of the internal audit committee of Gluck and Goodman, a public listed company producing complex engineering products. Barney Chester, the executive finance director who chairs the committee, has always viewed the purpose of internal audit as primarily financial in nature and as long as financial controls are seen to be fully in place, he is less concerned with other aspects of internal control. When Susan asked about operational controls in the production facility Barney said that these were not the concern of the internal audit committee. This, he said, was because as long as the accounting systems and financial controls were fully functional, all other systems may be assumed to be working correctly. Susan, however, was concerned with the operational and quality controls in the production facility. She spoke to production director Aaron Hardanger, and asked if he would be prepared to produce regular reports for the internal audit committee on levels of specification compliance and other control issues. Mr Hardanger said that the internal audit committee had always trusted him because his reputation as a manager was very good. He said that he had never been asked to provide compliance evidence to the internal audit committee and saw no reason as to why he should start doing so now. At board level, the non-executive chairman, George Allejandra, said that he only instituted the internal audit committee in the first place in order to be seen to be in compliance with the stock market’s requirement that Gluck and Goodman should have one. He believed that internal audit committees didn’t add materially to the company. They were, he believed, one of those ‘outrageous demands’ that regulatory authorities made without considering the consequences in smaller companies nor the individual needs of different companies. He also complained about the need to have an internal auditor. He said that Gluck and Goodman used to have a full time internal auditor but when he left a year ago, he wasn’t replaced. The audit committee didn’t feel it needed an internal auditor because Barney Chester believed that only financial control information was important and he could get that information from his management accountant. Susan asked Mr Allejandra if he recognised that the company was exposing itself to increased market risks by failing to have an effective audit committee. Mr Allejandra said he didn’t know what a market risk was. Required: (a) Internal control and audit are considered to be important parts of sound corporate governance. (i) Describe FIVE general objectives of internal control. (5 marks)