Auditing and Assurance Service 15e Test Bank

Use of due professional care, that is, whether the internal audit group has effective quality control

Auditors have the responsibilities as well as management to report internal controls. The auditors must examine closely management’s claim of effectiveness and also physically test the controls. After the examination, the auditors should express their opinion and any recommendations to fix any internal control weaknesses.

It highlights the importance of auditors applying sensitive and ethical judgments in all their engagements. Members have the responsibility to collaborate with each other to improve the art of accounting, as well as to maintain the public’s confidence. The auditor’s responsibilities are essential to an effective audit process because through planning, auditors should to communicate with each other, be very organized and discuss what and how to do things in order to serve the public. One of the most important parts in auditing is planning, for that reason responsibility is a must.

Arens, A. A., Elder, R. J., & Beasley, M. S. (2006). Auditing and Assurance Services (11th Ed.). Prentice Hall, Upper Saddle River, NJ: Pearson Prestice

As Internal auditors, we should provide advice, and challenge or support management's decisions on risk, as opposed to making risk management decisions.

A company might decide to establish an internal audit department because an effective and independent internal audit department add values and improve effectiveness of risk management, control, and governance processes. It also helps prevent and detect the frauds.

As an Internal Control Office team member, I support the Internal Control Office (ICO) audit liaison role for all communication between the Agency Office Chief Financial Officer (OCFO), the JSC OCFO, JSC Procurement Office, and various JSC organizations. The audit liaison role requires understanding the flow and dependencies between finance, procurement, and human resources in satisfying multi-departmental audit requests. As an Internal Control Office team member, I am responsible for understanding and communicating customers’ needs during audits, which are both crucial and time sensitive. Communication is an essential factor that is practiced on a routine basis, I support JSC various financial and internal control audits

The company should hire it’s own internal auditor’s to ensure that the staff understand the company’s accounting procedures. This also helps the external auditor as it give the external auditor another viewpoint when assessing fraud risks. The internal auditors are apart of those charged with governance and that helps take the pressure off of the external auditor if a fraud should be discovered.

The auditor’s responsibilities are to audit annual financial statements and internal controls over financial reporting, and reports from the 10-Q quarterly reports. The auditor must also advice on new accounting pronouncements, and consolidating financial statements. (Intel Proxy Statement 2011, 48)

3 pillars of effective internal audit services- independence and objectivitiy, proficiency, and due professional care.

Internal auditors cannot effectively provide an analysis on the company’s internal dealings as they are part of the company. External auditors, however, can observe these processes from the outside and then determine where the funds of the company and whether the dealings adhere to the regulations. Using external auditors in a company prevents conflict of interest from happening. Conflict of interest is a situation where an individual or organization has multiple interests and of those multiple interests, one could possible corrupt the motivation for an act on the other when the auditor has any kind of beneficial interest in their client’s performance. In other circumstances, there is also the threat of familiarity where auditors become

According to the Institute of Internal Auditors (IIA), (2011), the internal auditing is a team of consultants, a department and a division or other practitioner which independent, have objective assurance and conduct a consulting activity which is designed to add value and improve the organization operations. The internal auditor can help an organization in achieving its objectives by bringing a discipline and systematic approach in order to improve and evaluate the effectiveness of risk management, control and governance process.

The role of internal audit is to provide independent declaration that an organization’s threatadministration, governance and internal control processes are functioning effectively. Internal auditors deal with concerns that are essentially important to the existence and success of any organization. Unlike external auditors, they aspect beyond financial possibilities and statements to reflect wider problems such as the organization’s reputation, development, its power on the location and the approach it treats its organizations.In summary, internal accountantssupport organizations to thrive.

ABCO Corporation has a parts division in country A. Its assembly division is in country B, which has a higher tax rate than country A. To minimize the corporation's overall income tax, how should ABCO set its transfer prices between its parts and assembly divisions?

3. INTERNAL CONTROL & INTERNAL AUDIT  Internal Control  Internal Audit  Standards on Internal Audit 4. PROJECT PROFILE  Objectives  Research Methodology 5. LEARNINGS & OBSERVATIONS  Learnings        Audit Scope & Coverage Organisation Structure of IA Department Audit planning & process Audit approach & methodology Life cycle of an audit Performance evaluation Quality systems