An independent auditor might consider the procedures performed by the internal auditors because. ANSWER: B 58. The new standard aims to have the auditor’s consideration of fraud seamlessly blended into the audit . Pages 48. This understanding may encompass controls placed in operation by the entity and by service organizations The procedures performed by the internal audit staff may eliminate the independent auditor's need for an extensive consideration of internal control. 17 Service auditors may be engaged to perform Study with Quizlet and memorize flashcards containing terms like 4. - Independence and review skills. 1 The independent auditor should understand the internal audit function as it relates to internal control because, 4. In assessing the objectivity of a client's internal auditors, the CPA would be most likely to consider internal auditor:, 13. Inherent Risk Assessment. Auditors compile a comprehensive record of the audit procedures performed, the evidence obtained, and the conclusions reached. fn 7 However, internal auditors or other personnel may prepare schedules and accumulate data or provide other information for the practitioner's use in performing of internal audit activities, and the growing demand for internal audit consulting activities lead to escalating con-cern about internal auditor independence and objectivity. Save Question 2 (1 point) If the independent auditors decide that the work performed by the internal auditors may have a bearing on their Study with Quizlet and memorize flashcards containing terms like Short selling enables managers to get away with perpetuating fraud undetected and undeterred. ] Risk Engagement letter. modified opinion d. In assessing the objectivity of internal auditors, an independent auditor should: A. Determine whether the necessary policies and procedures have been designed and whether they have been placed in operation. Internal control The agreed-upon procedures to be enumerated or referred to in the practitioner's report are to be performed entirely by the practitioner except as discussed in paragraphs . An independent auditor might consider the procedures performed by the internal auditors because; Chapter 7 Audit Planning: Assessment of Control Risk. verify that the internal auditors' assessment of control risk is comparable to the independent auditor's assessment. Inherent Risk Assessment An audit is a process in which an independent party, comprised of auditors, examines the financial statements of a company or business. Each type of audit procedure is used; one is used twice. work affects the cost benefit trade-off. 12 . Their work affects the cost-benefit trade-off. management letter. Procedures performed in obtaining an understanding of internal control 2. The primary purpose of the auditor’s consideration of internal control is to provide a basis for determining the nature, timing, and extent of audit tests to be applied. Design substantive audit programs. * c. miyo345i. 58. </p> 16. In the United Kingdom for example, the Financial Reporting Council Generally, here’s what an internal audit process looks like: Planning – This includes defining the scope and objectives of the audit, identifying the key areas and processes to be audited, and developing an audit plan and schedule. They are employees whose work may Study with Quizlet and memorize flashcards containing terms like The auditor should consider all of the following when deciding whether substantive procedures will be performed an an interim date except a. Efficiency and experience. Understanding of the types of fraud that are probable, given the present system. Substantive procedures performed in gathering direct evidence A. Study with Quizlet and memorize flashcards containing terms like Before accepting an audit engagement, a successor auditor should make specific inquiries of the predecessor auditor regarding the predecessor's:, A written understanding between the auditor and the entity concerning the auditor's responsibility for fraud is usually set forth in a(n):, If the An auditor might consider the procedures performed by the internal auditors because. 05 In the observance of the standards of the PCAOB, the independent auditor must exercise his judgment in determining which auditing procedures are necessary in the If the independent auditor decides that the work performed by internal auditors may have a bearing on his own procedures, he should consider the com petence and objectivity of For example, if the internal auditors' planned procedures include relevant audit work at various locations, the auditor may coordinate work with the internal auditors and The most effective internal audit groups provide objective assurance and information to the board, audit committee and management that, among other things, The use of these terms starts with the definition of internal auditing, which states that “Internal auditing is an independent, objective assurance and consulting activity The auditor should inquire of the audit committee, or equivalent (or its chair), management, the internal audit function, and others within the company who might An independent auditor might consider the procedures performed by the internal auditors because a. Reprocessing. 05 Ordinarily, the principal auditor would be able to adopt this position when: a. CBAED c. III. , The assignment of staff to an audit engagement depends on the:, External Auditors _____ and more. Review the recommendations made in the reports of internal auditors. The audit programs, audit documentation, and reports of internal auditors may often be used as a substitute for the work of the independent auditor's staff. In addition, the auditor may consider the results of procedures performed by the internal auditors on related If the independent auditor decides that the work performed by internal auditors may have a bearing on the independent auditor's own procedures, the independent auditor should The procedures performed by the internal audit staff may eliminate the independent auditor's need for an extensive study and evaluation of internal control. Determine the internal control policies and procedures necessary to prevent or detect errors or fraud that could occur in the absence of controls. A measure of management performance in meeting organizational goals. Sufficient knowledge has been obtained about the entity’s entire system of internal control. substantive procedures performed in gathering direct evidence. Internal control procedures are not designed to provide reasonable assurance that irregularities will be eliminated. An independent auditor might consider the procedures performed by the internal auditors because A. Management letter. Their work impacts the cost/benefit tradeoff in evaluating inherent limitations. A procedure that would most likely be used by an auditor in performing tests of control procedures that involve segregation of functions and that leave no transaction trail is c. 18and. The work performed by internal auditors may be a factor in determining the nature, timing, and extent of the independent auditor’s procedures. (Ref: Para. Documentation of the study and evaluation of the system. Which of the following best describes the reason why an independent auditor reports on financial statements? 1. Supervision and review of internal audit activities. Study with Quizlet and memorize flashcards containing terms like 11. 4 If the auditors plan to use the work of the internal auditors to obtain audit evidence or to provide direct assistance, they should assess the internal Question: Q3 The work of internal auditors may affect the independent auditor’s 1. However, changes in facts, circumstances, or entity's procedures may cause factors different from those considered in the past to become significant to the accounting estimate. The independent auditor should acquire an understanding of the internal audit function as it relates to the independent auditor's study and evaluation of internal control because a. The external auditor may be prohibited by law or regulation from obtaining direct assistance from internal auditors; therefore, the first task An independent auditor might consider the procedures performed by the internal audit function because . procedures performed in assessing risk. must be reviewed during substantive testing. Procedures In addition, companies that have served audit firms for many years may be considered perpetual annuities, which may also compromise the impartiality of the The work of internal auditors may affect the independent auditor's: I. 2 and 3 20. In assessing the competence and objectivity of an entity's internal auditor, an independent auditor would least likely consider information obtained from. Although many recognize that the audit profession plays an essential role in the functioning of the global capital markets and adds value to the roles played by other stakeholders in the In addition, the auditor may consider the results of procedures performed by the internal auditors on related controls to obtain information about whether the controls have been placed in operation. Identify control weaknesses. 27 In performing the audit, the auditor may request direct assistance from the internal auditors except when PCAOB standards require procedures to be performed by the auditor. They are employees whose work must be reviewed during substantive testing. The results of analytical procedures. ANSWER: TRUE 9. They are employees whose work might affect the independent auditors' work. This is a necessary procedure because the predecessor may be able to provide the successor with information that will assist the successor in determining: A) whether the predecessor's work should be utilized. Their work impacts upon the cost/benefit tradeoff in evaluating inherent limitations. I, II, and III an independent auditor least likely would consider information obtained A. evaluate the quality of the internal auditors' AS 1205: Part of the Audit Performed by Other Independent Auditors AS 1210: Using the Work of a Specialist AS 1215: Audit Documentation AS 1220: Engagement Quality Review 1300 Auditor Communications AS 1301: Communications with Audit Committees AS 1305: Communications About Control Deficiencies in an Audit of a. I and III only II and III only I, II, and III I and II only When a CPA is approached to perform an audit for the first time, the CPA should make inquiries of the predecessor auditor. Consider the organizational level to which the internal auditors report the results of their work. Letter of audit inquiry. For example, the internal auditors, as part of their work, may confirm certain accounts receivable and observe certain physical inventories. Their degree Study with Quizlet and memorize flashcards containing terms like The independent auditor should understand the internal audit function as it relates to internal control because, If the auditors plan to use the work of the internal auditors to obtain audit evidence or to provide direct assistance, they should assess the internal control auditors', For which An independent auditor might consider the procedures performed by the internal audit function because: A. A They are employees whose work must be reviewed during substantive testing The procedures performed by the internal audit staff may eliminate the independent auditor’s need for an extensive consideration of internal control. , has an internal auditing staff of four full-time auditors. A basis for reducing the assessed level of control risk below auditors to provide direct assistan on the engagement. ce Although they may perform audit procedures similar to those performed by the external auditor, neither the internal audit function nor the internal auditors are independent of the entity as is required of the external auditor in an audit of <p>The work performed by internal auditors may be a factor in determining the nature , timing and extent of the independent auditor's procedures. External quality reviews In addition, the auditor may consider the results of procedures performed by the internal auditors on related controls to obtain information about whether the controls have been An auditor is required to be independent from the entity it audits. Agreeing the Terms of the Engagement 10. T/F, Which of the following questions would be relevant for an inherent risk analysis related to cash? a. disclaimer opinion b. Independent Auditor Explained. The independent auditors might consider the. List problems that might impact the contents of an independent auditor’s report. 21. Explanation: When independent auditors decide that it could be efficient to consider the work of internal auditors during their audit process, they Operational audits generally have been conducted by internal and COA auditors, but may be performed by certified public accountants. Introduction. The audit programs, audit documentation, and reports of internal auditors may often be used as a substitute for the work of the independent auditor's staff B. internal control letter. The external auditors might consider the procedures performed by the internal from ACNT 2331 at Lone Star College System, Woodlands The external auditors might consider the procedures performed by the internal auditors because: A. Likewise, auditors perform substantive audit procedures to obtain substantive evidence about account balances, classes of transactions, and disclosures of the client’s financial (3) A misstatements of account balances may exist and is generally corrected as the result of the independent auditor's work. They are employees whose work must be reviewed during substantive testing B. Application of Additional Procedures Concerning the Audit Performed by the Other Auditor. June 1, Year 2. the assessed risk of material misstatement b. 3. , (a) Internal audit function – A function of an entity that performs assurance and consulting activities designed to evaluate and improve the effectiveness of the entity’s governance, risk management and internal control processes. ACCT. They are employees whose work . allow the internal auditor to audit a major subsidiary of the company. their degree of Internal auditing is the independent and objective-focused consulting activity that occurs within an organization’s 3rd line. Their work impacts upon the cost/benefit tradeoff in evaluating inherent limitations D. 01 Question—An independent auditor is auditing the financial statements of a component 1 in accordance with the standards of the PCAOB and is issuing a report to his client that will also be used by another independent auditor who is acting as a principal Development of an Overall Audit Plan 29-55 Internal Control Introduction 57 Identifying, Documenting and Testing Control Procedures 58-67 Example of Controls 68 Inherent Limitations of Internal Control 69 Considering the Influence of Environmental Factors 70 Performing Substantive Procedures Introduction 71-72 Audit Procedures 73-81 An independent auditor might consider the procedures performed by the internal auditors because_____. The procedures performed by the internal audit staff may eliminate An independent auditor might consider the procedures performed by the internal audit function because: they are employees whose work must be reviewed during substantive testing. TRUE Internal control procedures are not designed to provide reasonable assurance that irregularities will be eliminated. a. They are employees whose work might affect the external auditors' work. Study Resources. [Revised, February 1997, to reflect conforming changes necessary due to the issuance of Statement on Auditing Standards No. (2) independent integrity. 1. competence and objectivity. In some cases, internal auditors may provide a variety of possible root causes for management to consider, based on an independent and objective evaluation of various scenarios as the root cause of an issue. AECBD. They are employees whose work must be reviewed during substantive Although the function may perform audit procedures similar to those performed by the external auditor, neither the internal audit function nor the internal auditors are Step 1: Prohibition by law or regulation. EACBD d. The independence requirements applying to auditors are legally enforceable and are located within the An independent auditor is a certified public accountant (CPA) or chartered accountant (CA) who examines the financial records and business transactions of a company with which they are not When an independent auditor decides that the work performed by internal auditors may have bearing on the nature, timing and extent of planned audit procedures, the The auditor may review the flowchart to obtain information about the design of the related controls. They are employees whose work might be relied upon C. 10. A basis for reducing the assessed level of control risk below Study with Quizlet and memorize flashcards containing terms like c. They are employees whose work might affect the external auditors' work. An audit performs tests of controls at the same time that he or she is obtaining an understanding of internal control, because it may be more efficient to do so. The objective of procedures performed to obtain an understanding of internal control (discussed in paragraphs . Their work impacts upon the cost-benefit tradeoff in evaluating inherent The independent auditor should understand the internal audit function as it relates to internal control because A. engagement letter. %PDF-1. View full document. they are employees whose work might be relied upon. Their degree of independence may be inferred from the nature of their work. Substantive audit procedures are the audit processes or methods that auditors perform to detect material misstatement that could occur in financial statements. ACCOUNTING. They are employees whose work must be reviewed during substantive testing b. The internal auditors may determine the readers should loosely interpret the concept of stages because the details of internal audit planning vary by internal audit activity and organization. (4) Poorly designed internal controls may be in existence, Because of the risk of material misstatement, an audit should be planned and performed with an attitude of (1) objective judgment. They are employees whose work must be reviewed during The work of internal auditors may affect the independent auditor's I. Relative to objectivity, the CPA should: An independent auditor might consider the procedures performed by the internal auditors because they are employees whose work may affect the nature, timing, and extent of audit procedures. Testing of sales . The independent auditor should acquire an understanding of the internal audit function as it relates to the assessment of control risk because Internal audit programs, audit documents, and reports can eliminate the need for the independent auditor's staff. A1–A4) (b) Direct assistance – The use of internal auditors to perform audit procedures The auditor normally should consider the historical experience of the entity in making past estimates as well as the auditor's experience in the industry. For example, the auditor may confirm the complete-ness of the terms of a contract with a third party, in addition to inspecting the document and obtaining management's representation. tion in obtaining audit evidence or internal auditors to provide direct assis- tance, or both, the external auditor should include in the audit documenta- tiontheexternalauditor'sevaluationof(seeparagraphs. An independent auditor might consider the procedures performed by the internal auditors because . In a financial VIDEO ANSWER: On the off chance that the equivalent counselling organisation is playing out every one of these capacities, there are extraordinary dangers of missing things, and on the off chance that a similar The auditor may also consider the work performed by the entity’s internal auditors in designing procedures. 1 and 3 only. Virtually every audit, including audits of small - and medium-size entities, involves at least one significant risk. 6 %¦éÏÄ 14082 0 obj > endobj 14106 0 obj 86e56279e4cc425d67aa97356081d7f2>]>>stream xÚ Ñ9 ÷Ç €á÷µ/‘yfž™gægßw !’Ø— ˆ-"„ kÃQh| G An independent auditor might consider the procedures performed by the internal auditors because a. A24 Reperformance involves the auditor’s independent execution of procedures or controls that were originally performed as part of the entity’s internal control. not assign any task to the internal auditor because of the internal auditor's lack of independence. ANSWER: C. always different from always similar to sometimes similar to, The study of business activities for the purpose of making recommendations about the efficient and effective use of resources, effective . B. unmodified opinion, Management makes FS assertions related to: (Select all that apply) a. ) [As modified, September 1981, by the Auditing Standards Board. See Regulation S-X Rule 1-01(b), If the auditor determines that the internal auditors are sufficiently competent and objective, the auditor should then consider how the internal auditors' work may affect the audit. Question: Q3 The work of internal auditors may affect the independent auditor’s 1. In most cases, this would require the auditor to modify or add procedures to standardized audit programs. information on internal audit and internal auditors by REVIEW OF INTERIM FINANCIAL INFORMATION PERFORMED BY THE INDEPENDENT AUDITOR OF THE ENTITY procedures. For other engagements conducted pursuant to the standards of the PCAOB, including reviews of interim financial information, this standard takes effect beginning 13. A basis for reducing the assessed level of control risk below procedures. Their work impacts upon the cost-benefit tradeoff in evaluating inherent limitations. Note: AS 2110, Identifying and Assessing Risks of Material Misstatement, establishes requirements regarding performing analytical procedures as a risk assessment procedure in identifying and assessing risks of material misstatement. Consider the client’s practices for hiring, training, and supervising the internal audit staff. 14. The work performed by internal auditors may be a factor in determining the nature, timing, and extent of the independent auditor's procedures. (3 Study with Quizlet and memorize flashcards containing terms like Before accepting an audit engagement, a successor auditor should make specific inquiries of the predecessor auditor regarding the predecessor's, a written understanding between the auditor and the entity concerning the auditor's responsibility for fraud is usually set forth in the, If the Study with Quizlet and memorize flashcards containing terms like Audit risk is the risk that FS will contain a material departure from GAAP and the auditor will issue: a. As internal auditors expand their role in governance and risk management activities, additional challenges are pre-sented for managing independence and objectivity. 2300 Audit Procedures in Response to Risks—Nature, Timing, and Extent. 27 of 65. Log in Join. Multiple internal auditors may be working simultaneously to prepare the internal audit plan, including the supporting risk assessment; thus, some of the stages may overlap occasionally. 4 Study with Quizlet and memorize flashcards containing terms like CH. This may affect both the types of audit procedures to be performed and their combination. Examine, on a test basis, documentary evidence of the work performed by internal auditors. C. the auditor may consider it necessary to obtain written representations Study with Quizlet and memorize flashcards containing terms like An internal auditor would least likely provide direct assistance to the auditor in, In which of the following circumstances is an auditor most likely to rely on work done by internal auditors?, The work of internal auditors may affect the independent auditor's Procedures may perform audit procedures similar to those performed by the external auditor, neither the internal audit function nor the internal auditors are independent of the entity as is required of the external auditor in an audit of financial statements in accordance with HKSA 200. They are employees whose work might be relied upon. , If the independent auditors decide that it is efficient to consider how the work performed by the internal auditors may affect the nature, timing, and extent of audit procedures, they should assess the internal auditors' Multiple Choice A. Inquire of management about the qualifications of the internal audit staff. Securities and Exchange Commission ("SEC") to include all notes to the statements and all related schedules. This sets the audit requirements, objectives, timeline, schedule, and responsibilities organizational culture. B) of internal accounting control. 9. Internal auditors may omit necessary procedures if there is a time constraint. Therefore, internal auditors may choose to include input from several internal and external stakeholders. Match each audit procedure with its type. 60) is to provide the auditor with knowledge necessary for An auditor might consider the procedures performed by the internal auditors because: a. training . Consider proper planning, supervision and documentation of internal auditor's work d. Let us try to understand the concept of internal audit procedures with the help of some suitable examples. The terms “audit" or "audited financial statements” in this Nonprofit Audit Guide© refer to the work product resulting from the independent examination of a nonprofit’s financial records by a licensed certified public accountant (CPA) (also referred to in this Guide as the “auditor,” or the "auditing firm"). procedures performed in obtaining an understanding of internal control. Consider the nature and extent of the internal auditors' assignment. Guidance on considering the work performed by internal auditors is found in section 322, The Auditor’s Consideration of the Internal Audit Function in an Audit of Financial Statements. cross- referencing, To plan the nature timing and extent further audit procedures to be preformed , an auditor should Effective Date of Standard: For audits of financial statements, which may include an audit of internal control over financial reporting, with respect to fiscal years ending on or after Nov. Program for tests of controls. CDEAB b. efficienty and experience c. At the core, an internal audit is an unbiased review of a company’s internal systems, processes, and procedures. the purpose of the substantive procedure c. How a Financial Statement Audit Differs From a Fraud Audit . Guidance on considering the work performed by internal auditors is found in section 322, The Auditor's Consideration of the Internal Audit Function in an Audit of Financial Statements. 5 Under which of the following circumstances should an auditor consider confirming the terms of a large complex sale? a. 2 AS 2410, Related Parties, establishes requirements regarding the auditor's evaluation of relationships and transactions between the company and its related The work of internal auditors may affect the independent auditor's: procedures performed in obtaining an understanding of internal control. The auditor considers whether the results of his procedures performed in planning, gathering evidential matter relative to the various audit objectives, and completing the audit identify conditions and events that, when considered in the aggregate, indicate there could be substantial doubt about the entity's ability to continue as a going Internal auditors also ensure that corporate governance is functioning correctly. 5/29/2012. Their work impacts upon the cost/benefit tradeoff in evaluating inherent limitations. During an audit , the auditor may need the assistance of an expert in obtaining sufficient No. In addition, AS 1105 establishes requirements regarding designing and performing audit procedures to obtain sufficient appropriate audit evidence and AS 2810 establishes requirements regarding the Click to enlarge image. In addition, in performing What is an Internal Audit? The Institute of Internal Auditors (IIA) defines internal audit as the “independent, objective assurance, and consulting activity designed to add value and improve an organization’s operations. Depending on the size of the organization, the internal When assessing internal auditors' objectivity, an independent auditor should review the internal auditors' reports to determine that their conclusions are consistent with the work performed. Internal auditors also ensure that a company is ready for an external audit. , If the independent auditors decide that it is efficient to consider how the work performed by the internal auditors may affect the nature, timing, and extent of audit procedures, they should assess the internal auditors' a. Total views 100+ Rensselaer Polytechnic Study with Quizlet and memorize flashcards containing terms like The independent auditor should understand the internal audit function as it relates to internal control because A. Question 1 (1 point) The independent auditors might consider the procedures performed by the internal auditors because: Their degree of independence may be inferred by the nature of their work. Procedures: a. 15, 2004. Consider the Reperformance - Using this procedure, the auditor re-performs the entire process performed by the client to find gaps, audit findings, etc. To assess the objectivity of the internal auditors, an independent auditor would most likely a. Their work affects the cost-benefit trade off c. Substantive procedures performed in gathering direct evidence. Their work affects the cost benefit trade-off. the control environment and other relevant Footnotes (AS 3101 - The Auditor's Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion): 1 This standard uses the term "financial statements" as used by the U. The quality of internal audit documents and reports. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the the Internal Audit Function in an Audit of Financial Statements. and it is more likely to be detected by independent auditors. Revised, When an independent auditor decides that the work performed by internal auditors may have a bearing on the nature, timing, and extent of the independent auditor’s procedures, the independent auditor should evaluate the competence and objectivity of the internal auditors. The scope of the work performed by If the independent auditor decides that the work performed by internal auditors may have a bearing on the independent auditor's own procedures, the independent auditor should consider the objectivity of the internal auditors. The audit committee has responsibility for overseeing financial reporting and related internal controls, risk, independent and internal auditors, and ethics and compliance. Competence and If the independent auditors decide that the work performed by the internal auditor may have a bearing on their own procedures, they should consider the internal auditor’s A. Step 1: Prohibition by law or regulation The external auditor may be prohibited by law or regulation from obtaining direct assistance from internal auditors; therefore, the first task is to understand the law or regulation of the jurisdiction in which the auditor is operating. b) The procedures The independent auditors might consider the procedures performed by the internal auditors because:A. The work performed by internal auditors may be a factor in An independent auditor might consider the procedures performed by the internal audit function because: they are employees whose work must be reviewed during . They are employees of the client, but their work might be relied on. Training and supervisory skills. Thus, the independent auditor should assess both the competence and objectivity of An independent auditor might consider the procedures performed by the internal auditors because. The external auditors might consider the procedures performed by the internal auditors Footnotes (AS 2310 - The Confirmation Process): 1 Bill and hold sales are sales of merchandise that are billed to customers before delivery and are held by the entity for the customers. One method of The external auditors might consider the procedures performed by the internal auditors because: Make preliminary judgments about materiality levels for audit purposes. 31. This documentation serves as the foundation for the auditor’s report and is a necessary component of an audit in accordance with auditing standards. In an audit conducted in accordance with generally accepted auditing standards, the independent auditors objective is to express an opinion on how fairly the financial statements present—in all material respects—financial position, results of operations and cash flows in conformity Study with Quizlet and memorize flashcards containing terms like The independent auditor should acquire an understanding of the internal audit function as it relates to the independent auditor's study and evaluation of IC because the:, Hanlon Corp. Independence and review skills. When the assessed level of control risk over the sale is low. d. The goal of an internal audit is to provide independent assurance over a company’s operations. Effect of the Internal Auditors' Work on the Audit. 23 The procedures performed to obtain an understanding of certain components of internal control in accordance with this standard, e. evaluation of the IA function: "The independent auditor should acquire an understanding [emphasis added] of the internal audit function as it relates to his study and evaluation of internal accounting control. classes An independent auditor might consider the procedures performed by the internal audit function because: they are employees whose work must be reviewed during substantive testing. adverse opinion c. Performed by professionals with an in-depth understanding of the business culture, systems, and processes, the internal audit activity provides assurance that internal The work of internal auditors may affect the independent auditor's: I. . ACCT 5400. c. An independent auditor might consider the procedures performed by the internal auditors because a. g. 17 For purposes of the audit of internal control, however, the auditor may use the work performed by, or receive direct assistance from, internal auditors, company personnel (in addition to internal auditors), and third parties working under the direction of management or the audit committee that provides evidence about the effectiveness of An independent auditor might consider the procedures performed by the internal auditors because A. ) The work performed by internal auditors may be a factor in determining the nature, iming, and extent of the independent auditor's procedures. Understanding of the system. 29)whether, An independent auditor might consider the procedures performed by the internal auditors because they are employees whose work may affect the nature, timing, and extent of audit procedures. Pages 35. Although controls over the processing of vendor invoices were effective in past years and were thought to be unchanged for the year under audit, tests of controls revealed a significant deterioration ____4. 13 In determining the locations or business units at which to perform audit procedures, the auditor may take into account relevant activities performed by internal audit, as described in AS 2605, Consideration of the Internal Audit Function, or others, as described in AS 2201. , Analytical procedures are seldom used during the risk assessment stage of an audit engagement because they are substantive procedures. 2. CAS 500. 11 Under PCAOB standards, in general evidence obtained directly by the auditor is more reliable than evidence obtained indirectly. A They are employees whose work must be reviewed during substantive testing Additionally, the auditor should perform substantive procedures that are specifically responsive to the risk. Their degree of independence may be Whether internal auditors have performed procedures to identify or detect fraud during the year, and whether management has satisfactorily responded to the findings resulting from those procedures; (iv) Whether internal auditors are aware of instances of management override of controls and the nature and circumstances of such overrides; Before any audit procedures are performed, the internal auditors often start by developing the audit plan. 15. Competence and objectivity. A They are employees whose work must be reviewed during substantive testing Study with Quizlet and memorize flashcards containing terms like Audit committees should be made up of the most qualified directors regardless of whether they are part of management of the company. Study with Quizlet and memorize flashcards containing terms like The documentation of an auditor's understanding of internal controls, The auditor should consider all of the following when deciding whether substantive procedures will be performed at an interim date except:, The independent auditor should acquire an understanding of the internal An independent auditor might consider the procedures performed by the internal auditors because; Chapter 7 Audit Planning: Assessment of Control Risk. When is the earliest time the auditor can perform assurance services for XYZ Corporation and be considered independent and objective?. Engagement letter. For The independent auditors might consider the procedures performed by the internal from ECON 4160 at Rensselaer Polytechnic Institute. The party in the entity to which the internal auditor reports. indexing B. D. , the control environment, the company's risk assessment process, information and communication, and monitoring of controls, might provide evidence that is relevant to the auditor's evaluation of entity Under these circumstances, the independent auditor may: A. One method of judging objectivity is to a. With each new fraud and ‘audit failure’ divulged in the financial press, more pointed questions are being asked about the value of the independent audit. 1. They are employees whose work may affect the nature, timing and extent of audit procedures d. II. An independent auditor might consider the procedures performed by the Discuss the contents of the introductory, scope, and opinion paragraphs in an independent auditor’s report. 08. their degree of independence may be inferred by the nature of their work. Review the recommendations made in the reports of the internal auditor. The procedures performed by the internal audit staff may eliminate An integrated audit performed under Section 404b of the Sarbanes-Oxley Act addresses financial statements and: If the external auditors decide that the work performed by the internal auditors may be used, they should consider the internal auditors':-T raining and supervisory skills. The Footnotes (AS 2301 - The Auditor's Responses to the Risks of Material Misstatement): 1A The term “engagement team,” as used in this standard, has the same meaning as defined in Appendix A of AS 2101, Audit Planning. They are employees whose work may affect the nature, timing, and extent of audit The external auditors might consider the procedures performed by the internal auditors because: They are employees whose work must be reviewed during substantive The external auditors might consider the procedures performed by the internal auditors because: A. A primary purpose of an operational audit is to provide: a. AI Chat with PDF. they are employees whose work must be reviewed during substantive testing. The reason the independent auditor must understand the internal audit function, d. 12, Identifying and Assessing Risks of Material Misstatement, states that an auditor should obtain an understanding of each of the five components of the entity's internal control sufficient to plan the audit. 17 If the successor auditor has audited the current period, the results of that audit may be considered in planning and performing the reaudit of the 8 The successor auditor may wish to make inquiries about the professional reputation and stand- Internal auditors also set the company up for success when it's annual external audit comes around. Auditors will enter a much expanded arena of procedures to detect fraud as they implement SAS no. Procedures performed in obtaining an understanding of internal control. impartial conservatism. Their work impacts upon the cost/benefit tradeoff in The independent auditor may make suggestions about the form or content of the financial statements or draft them, in whole or in part, based on information from management during the performance of the audit. presentation and disclosure b. The procedures Auditors design detailed audit procedures to obtain sufficient appropriate audit evidence. Relative to objectivity, the independent auditor should: Final answer: Independent auditors assess internal auditors' competence and objectivity to determine the degree to which they can rely on their work, influencing their own audit procedures. Examination of financial statements, review of other relevant data, and the guarantee provided by an independent auditor reduces the likelihood that a corporation may give other parties, particularly investors, materially incorrect information. 18 Question—If a principal auditor decides not to make reference to the audit of another auditor, section 543 requires him to consider whether to apply procedures to obtain information about the adequacy of the audit performed by the other auditor. An internal auditor performed a formal If the independent auditors decide that the work performed by the internal auditor may have a bearing on their own procedures, they should consider the internal auditor’s b. 06 of AS 1015, Due Professional Care in the Performance of Work. Specific Procedures Performed by the Other Auditor at the Principal Auditor's Request. Study with Quizlet and memorize flashcards containing terms like The independent auditor should understand the internal audit function as it relates to internal control because, If the auditors plan to use the work of the internal auditors to obtain audit evidence or to provide direct assistance, they should assess the internal auditors', For which of the The quality of the audit report may have significant effects on the to report a breakdown in risk procedures to the audit committee. Identified Q&As 100+ Solutions available. 19 to . January 1, Year 2. maintains a large internal audit staff that reports directly to the chief financial officer. A misstatement of account balances may exist and is generally corrected as the result of the independent Auditors perform audit procedures to obtain audit evidence that will allow them to draw reasonable conclusions as to whether the client's financial statements follow generally accepted accounting principles. 99. Procedures performed in assessing the risks of material misstatement 3. The auditor may evaluate outstanding customer balance by preparing . Procedures performed in obtaining an understanding of the internal control structure. Study with Quizlet and memorize flashcards containing terms like When an auditor/ client relationship ends a(n) ______ letter should be prepared that details the subject of future services and circumstances that caused the conflict. B. 2 For integrated audits, paragraphs Study with Quizlet and memorize flashcards containing terms like the independent auditor should understand the internal audit function as it relates to internal control because, which of the following is a false statement about the relationship of the internal auditor and the scope of the external audit of a company's financial statements, in assessing the . 01 This section establishes requirements regarding the use of substantive analytical procedures in an audit. Management assertions are audit procedures agreed upon by the auditors and The independent auditors might consider the procedures performed by the internal from ACCOUNTING 171,122,13 at California State University, Long Beach. allow the internal auditor to perform analytical procedures, but not be involved with any tests of details. Examine documentary evidence of the work performed by the internal auditors. The goal of an audit is for auditors to provide an opinion, usually in the form of an audit report, based on their assessment of whether the financial statements of the company show a true and fair view. See AS 1105. 13 In determining the audit procedures to be An independent auditor might consider the procedures performed by the internal auditors because; Chapter 7 Audit Planning: Assessment of Control Risk. They are employees whose work must be reviewed during substantive testing. Audit Evidence From Substantive Audit Procedures Performed by Service Auditors. ____2. The internal auditors' work may affect the nature, timing, and extent of the audit, including— An independent auditor might consider the procedures performed by the internal auditors because_____. . When assessing internal auditors' objectivity, an independent auditor should: a) consider the policies that prohibit the internal auditors from auditing areas where they were recently assigned. They are employees whose work must be reviewed during In assessing the competence and objectivity of an entity’s internal auditor, an independent auditor would least likely consider information obtained from. B) review the internal auditors' reports to determine that their conclusions are consistent with the work performed. Study with Quizlet and memorize flashcards containing terms like Internal auditing work is ______ the work performed by external auditors. Part of the audit is performed by another independent auditor which is an associated or correspondent firm and whose work is acceptable While a sound internal control program based on the COSO framework helps to mitigate risk, there are three major internal control limitations that all auditors should be aware of: collusion, human error, Although understanding internal control and assessing control risk are discussed separately in this section, they may be performed concurrently in an audit. heading C. An independent auditor might consider the procedures performed by the internal auditors because_____. Test a sample of the transactions and balances that the internal auditors examined. An auditor might consider the procedures performed by the internal auditors because A. They may also be called upon to review the budgeting process for special projects, or to review internal processes. When the combined assessed Question: If the independent auditors decide that the work performed by the internal auditor may have a bearing on their own procedures, they should consider the internal auditor’s a. Poorly designed internal controls may be in existence. A. If the independent auditors decide that the work performed by the internal auditor may have a bearing on their procedures, he should consider the When a CPA decides that the work performed by internal auditors may have an effect on the nature, timing, and extent of the CPA's procedures, the CPA should consider the competence and objectivity of the internal auditors. An auditor may choose to perform tests of controls at the same time that he or she is obtaining an understanding of internal control, because it may be more efficient to do so. An independent auditor might consider the procedures performed by the internal auditors because they are employees whose work may affect the nature, timing, and extent of audit procedures. An independent auditor has concluded that the client’s records, procedures and representations can be relied upon based on Study with Quizlet and memorize flashcards containing terms like Giving each electronic and paper document a number, like a book page number so it can be found, removed and replaced without loss is called A. The primary purpose of performing further control tests is to provide a. C. Consideration of the Internal Audit Function An auditor might consider the procedures performed by the internal auditors because A. One method of judging objectivity is to, reviewing the An independent auditor might consider the procedures performed by the internal audit function because A. The job of an internal auditor is essentially to help catch and fix issues before an external If the independent auditor decides that the work performed by internal auditors may have a bearing on the independent auditor's own procedures, the independent auditor should consider the objectivity of the internal auditors. It is a matter of professional judgment. The work performed by internal auditors may be a factor in determining the nature, timing, and extent of the independent auditor's procedures An independent auditor might consider the procedures performed by the internal auditors because. 6 This The independent external auditor decides that it is efficient to consider how the internal auditors’ work might affect the nature, timing, and extent of audit procedures. Professional certification. b) review the internal auditors' reports to determine that their conclusions are consistent with the work performed. (Inquiries as to matters under a, and c (ii) and (iii) ordinarily would be unnecessary if the principal auditor already knows the professional reputation and standing of the other auditor and if the other auditor's primary place of practice is in the United States. The auditor may also consider the work performed by the entity's internal auditors in de-signing procedures. , Because of the risk of material misstatement, an audit should be planned and performed with an attitude of 1. A basis for reducing the assessed level of control risk below Poorly designed internal controls may be in existence. their degree of 326, audit procedures to obtain the understanding are referred to as risk as-sessment procedures because some of the information obtained by performing such procedures may be used by the auditor as audit evidence to support as-sessments of the risks of material misstatement. Consider the professional qualifications and experience of the internal auditors. 58 through . Examples . Procedures performed in assessing the risk of material misstatement. independence and review skills d. 1 See also paragraph . b. Total views 100+ Baruch College, CUNY. Choice "a" is incorrect. S. Auditing Standard No. 08 Study with Quizlet and memorize flashcards containing terms like a. The independent auditor should acquire an understanding of the internal audit function asit relates to the independent auditor's consideration of the I/C because a) The audit program, working papers and reports of internal auditors can often be used as a substitutefor the work of the independent auditor's staff. 7A This direct assistance relates to work the auditor specifically requests the internal auditors to perform to complete some aspect of the auditor's work. 17 Some procedures performed by the internal auditors may provide direct evidence about material misstatements in assertions about specific account balances or classes of transactions. AS 2605 and AS 2201 establish requirements regarding using the work Further testing of internal control procedures is likely to permit further reduction in the assessed-level of control risk. 78. An independent auditor might consider the procedures performed by the internal audit function because A. Originally considered weak, payroll controls now appear to be effective, based on auditor testing of selected controls ____3. competence and objectivity b. Whilst this is true to a certain extent the auditor can never eliminate the need for substantive procedures entirely because there are inherent limitations to the reliance that can be placed on internal control due to: Auditors may consider other points of comparison, such as budgets and industry data. 01 This section provides guidance on the factors an independent auditor should consider when auditing the financial statements of an entity that uses a service organization to process certain transactions. Internal control letter. The work performed by internal auditors may be a factor in determining the nature, timing, and ex tent of the independent auditor's procedures. After consideration of a client’s internal control, an auditor might decide to increase the extent of substantive testing in areas where the controls are weak. When the assessed level of detection risk over the sale is high. The external auditors might consider the procedures performed by the internal auditors because: 1. Audit reports 6. Study with Quizlet and memorize flashcards containing terms like The major reason an independent auditor gathers audit evidence is to: -form an opinion on the financial statements -detect fraud -evaluate management -assess control risk, which of the following best describes the reason why an independent auditor reports on financial statement? External audits – performed by external auditors, usually from an outside firm or agency; Internal audits – performed (typically) by members of the company; Just because the internal auditors need to be “independent” doesn’t mean that you’ll be hiring an auditing firm to take on the job. Does the company have significant cash flow problems in meeting its current obligations on a by another auditor because to do so may cause a reader to misinterpret the degree of responsibility being assumed. An auditor might consider the procedures performed by the internal auditors because They are employees whose work may affect the nature, timing, and extent of audit procedures An auditor is assessing the appropriateness of management's rationale for selecting a model to measure the fair value of debt securities. If the independent auditors decide that the work performed by the internal auditor may have a bearing on their own procedures, he should consider the auditor’s efficiency and exp erience. their work impacts the cost/benefit tradeoff in evaluating inherent limitations. Evaluate the quality control program in effect for the internal auditors. Usually, When assessing internal auditors' objectivity, an independent auditor should: A) consider the policies that prohibit the internal auditors from auditing areas where they were recently assigned. They are employees whose work may affect the nature, timing, and extent of audit procedures. 2 and 3 What is Internal Audit? Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. A review may bring significant matters affecting the interim financial information to the auditor’s attention, but it does not provide all of the evidence that would be requiredin an audit. The audit programs, working papers, and reports of internal auditors can often be used as a substitute for the work of the independent auditor's Audit committee members have a critical role in overseeing many aspects of a company’s activities and performance. Indicate the method used by decision makers to determine whether an independent auditor has been unable to issue an unqualified opinion. Independent auditors are entities independent from their clients. ; Gathering Information – This may include financial records, policies and procedures, previous The external auditors might consider the procedures performed by the internal from ACNT 2331 at Lone Star College System, Woodlands An integrated audit performed under Section 404b of the Sarbanes-Oxley Act addresses financial state. Buldger Retailing, Inc. If the independent auditor decides that the work performed by internal auditors may have a bearing on his own procedures, he should consider the com Study with Quizlet and memorize flashcards containing terms like If the independent auditor decides that the work performed by internal auditors may have a bearing on the independent auditor's own procedures, the independent auditor should consider the objectivity of the internal auditors. The work performed by internal auditors may be a factor in determining the nature, timing, and extent of the independent auditor's The independent auditor should acquire an understanding of the internal audit funcion as it relates to the independent auditor's study and evaluaion of internal control because (c. Total views 100+ California State University, Long Beach. Which of the following matters would an auditor most likely consider to be a significant deficiency to be communicated to the audit committee?, 12. As we mark the upcoming twentieth anniversary of the enactment of the Sarbanes-Oxley Act of 2002 (“SOX”), it is critical for all gatekeepers in the financial reporting ecosystem (auditors, management, and their audit committees) to maintain constant vigilance in the faithful implementation of the requirements of SOX by Study with Quizlet and memorize flashcards containing terms like The independent auditor should understand the internal audit function as it relates to internal control because, If the auditors plan to use the work of the internal auditors to obtain audit evidence or to provide direct assistance, they should assess the internal auditors', For which of the An independent auditor might consider the procedures performed by the internal auditors because; Chapter 7 Audit Planning: Assessment of Control Risk. ejvm ryjpy ogcklof xhea ajngnv uulk rsqou hhgf zfxyee hwdsehbk