Analyze the steps audit committe can take to facilitate proper oversight and direction of internal auditors? A company is working out of Vienna with operations in New York simultaneously calls Citibank in New York City and Barclays in London

Following are the areas in which an Audit committee can facilitate proper oversight and direction of internal auditors:

Technology application - New tools & techniques like data mining are enhancing audit’s effectiveness & efficiency and the committee can give direction & check how internal team is applying this.

Strengthen relationship between internal audit and committee – Having regular interactions between the two will ensure proper accountability and knowledge sharing

Risk plan - Flexible internal risk plan which is reactive to change.

Set strategic vision and plan - Auditors should plan effectively & efficiently to their audit plans and the same should be shared with the committee on timely basis for their guidance

Ensure compliance with The International Standards for the Professional Practice of Internal Auditing - Audit committee should ensure compliance of internal auditors with the global standards of the Institute of Internal Auditors (IIA)

Assessing talent in internal audit team for the organization – Internal Audit team is a source of functional expertise for the organization because of their greater understanding of the function’s processes and hence could be a good resource to deploy in the functions

Define value addition of internal audit – Audit committee can define value addition of internal audit to the internal and external stakeholders and ensure proper support from the management in terms of resources like manpower, tools, their time and guidance etc.

Capability building - Capability building of internal audit team through regular training programs and go-and-see visits to other organizations, seminars and other forums.

Given $2 million and the following quotes

Bank C - $1.2828–29/€

Bank B - $1.2824–25/€

There are two different arbitrage strategies that can be attempted. The first is to buy euros from bank B and then selll to bank C:

Buy euros Bank B:

Euros to be bought = $2,000,000*Euro/$1.2825

=1,559,454 Euros

Sell euros Bank C

Euros to be sold = 1,559,454 Euros *$1.2828/Euro

=$2000468

The profit/loss can be calculated by subtracting the original starting amount of dollars by post-arbitrage amount:

Profit/loss = $2000468 - $2,000,000

= 468

The second strategu involves buy euros from bank C and selling them to bank B:

Buy euros Bank C:

Euros to be bought - $2,000,000 *Euro/ $1.2829

=1,558,968 Euros

Sell euros Bank B:

Euros to be sold = 1,558,968 Euros * $1.2824/ Euro

= $ 1,999,221

The profit/ loss can be calculated by subtracting the original starting amount of dollars by the post- arbitrage amount :

Profit/Loss - $ 1,999,221 - $2,000,000

= -779.484

In the 1st instance, the arbitager make a profit and in second instance arbitrage cannot make a profit using these quotes.