The following scenario relates to questions 16–20 You are an audit manager of Buffon & Co, and you have just been assigned the audit of Maldini Co (Maldini). The audit engagement partner who is responsible for the audit of Maldini, a listed company, has been in place for approximately eight years and her son has just been offered a role with Maldini as a sales manager. This role would entitle him to shares in Maldini as part of his remuneration package. Maldini’s board of directors is considering establishing an internal audit function, and the finance director has asked Buffon & Co about the differences in the role of internal audit and external audit. If the internal audit function is established, the directors have suggested that they may wish to outsource this to Buffon & Co. The finance director has suggested to the board that if Buffon & Co is appointed as internal as well as external auditors, then fees should be renegotiated with at least 20% of all internal and external audit fees being based on the profit after tax of the company as this will align the interests of Buffon & Co and Maldini. 19. Following management’s request for information regarding the different roles of internal and external audit, you have collated a list of key characteristics. (1) Appointed by audit committee (2) Reports are publicly available to shareholders (3) Review efficiency and effectiveness of operations to improve operations (4) Express an opinion on the truth and fairness of the financial statements Which of the following options correctly allocates the above statements to the relevant auditor? External Internal