How Does Internal Auditing Maintain Its Independence and Objectivity

The factor that plays the greatest role in determining auditor independence is independence in mind. Auditors may or may not appear to be independent, but if the auditor is truly independent in mind, then the auditor can remain objective and unbiased. The profession should consider tightening the Code of Professional Conduct to address the issue of an audit team member knowing a close friend that holds any position at the audit client. If this scenario arises, the firm can still audit the client, but the audit member with the close relationship won’t be able to be on the audit team.

Corporate Responsibility contains 8 sections which senior executives take individual responsibility for the accuracy and transparency of the organization financial statements. In other words the executives cannot longer bounce responsibility for the inaccuracies of their financial reports, and it describes the communication between organization audit committees and external auditors.

Having internal controls is one thing, but how the company evaluates that control is a matter all by itself. Being an independent auditor, it is our job to understand an entity and

The effective use of IA departments causes less dependency and or reliance on external auditing. Ineffective use of this department can create reliability of the external audit firm, high costs for use of their services. Ideally, effective auditing should be done twice a year, consist of a short period of attendance; whereas, if it is possible for charities to have an internal auditing department, auditing will be carried out as often as every three months and the likelihood of any mismanagement of funds will be greatly reduced and this lead to gradual abolition. For effective IFC practices, various functions should be implemented to address each area so that effective operations are in place and at the same time reduce

If independence was not viewed as an important issue in the field of auditing then there would not be rules and regulations strictly forbidding it. With the scandals of Enron, WorldCom, Deloitte and Touche, and others it is apparent that not all auditors act in an ethical manner. With the SEC and other organizations cracking down on these issues it will hopefully clean up the image of auditing in the future.

The independent auditing firm for Bombardier is Ernst and Young. The independent auditor has direct access to the Audit Committee and has the right to attend all meetings of the Audit Committee, unless there is a private session. The responsibility of the independent auditor includes preparing the annual audited consolidated financial statements and conducting a quarterly financial review, and making recommendations to strengthen the internal accounting and financial controls of Bombardier. The independent auditor also determines if Bombardier 's financial statements are complete and accurate and are in accordance with generally accepted accounting principles. The audit committee reviews

Independence is extremely important, necessary, and appropriate because without an independent IAD, IAD’s objective of adding values and improving business operations cannot be achieved. Independence is also a key component in Attribute Standard. Accountability section states the chief audit executive’s responsibility to the management and audit committee. It is necessary and appropriate because it leads to significant communication between the CAE and top management and between the CAE and the Board; it also helps ensure that the standards and requirement of the internal auditing function is achieved.

General Standard #2: The auditor must maintain independence in mental attitude in all matters relating to the audit (AICPA, 2012). Anderson did not practice independence from the company they were auditing. They were too involved in too many of Enron’s activities.

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.

According to ICAEW, auditor independence mainly refers to the independence of the external auditor from parties that have an interest in the financial statements of the business being audited. It requires having both integrity and an objective manner to the auditing process. In order for the concept to be deemed effective the auditor needs to carry out their work freely. One of the main purposes of auditing is to increase credibility of the entity’s’ financial statements, as they have expressed their own professional opinion on the truth and fair view in accordance with the proper accounting standards used. This is only possible if the audit is made with reasonable assurance that it has come from an independent source and has not been influenced by other parties, such as managers, directors or by conflict of interest.

Consulting- Advisory and add value and improve organization 's governance, risk management and control processes.

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

The internal auditor have a several roles in the company which is the first one the audit committee need to discharge and restrict the governance responsibilities and the

The aim of this essay is to study the function of external auditors in order to analyze why it is important to be independent. The primary mission of external auditors is to review and evaluate all the financial records of a company or corporation. They provide an objective opinion on the organization’s financial statement and effectiveness of the accounting polices in order to help management to make decisions. If the independence of the external auditors is impaired, the public will doubt the quality of professional auditing services, and the consequence would be very serious, just like the bankruptcy of Enron led to the disorganization of Arthur Andersen, once a giant accounting company in the world. In order to maintain and increase

This paper critically analyses the independence of the internal audit function through its relationship with management and the audit committee. Given the growing role of internal auditing in contemporary corporate governance and independence has gained renewed attention.