Which TWO of the following are potential DISADVANTAGES of outsourcing internal audit to an external audit firm? 1. A greater range of experience would be brought to the internal audit team. 2. It could create a self-review threat during the external audit. 3. It could create a conflict of interest with financial forecast reviews. 4. The internal audit function would have less understanding of the company's business.

Which TWO of the following procedures would an audit firm carry out when accepting an engagement to review financial forecasts? 1. Enquire with the bank as to the format of financial forecasts required. 2. Perform analytical procedures on previous years' financial statements to ensure consistency with past trends. 3. Obtain written representations from management regarding financial forecasts. 4. Enquire of management and directors regarding the assumptions made in preparing the forecasts.

Which of the following statements about non-audit services provided by audit firms regarding financial forecast reviews is TRUE?