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Tuto IA Services Solution

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28 views1 page

Tuto IA Services Solution

Uploaded by

MERINA
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Tutorial_Internal Audit Services_Ans

21-1 Internal auditing may be defined as an independent, objective assurance and consulting
activity designed to add value and improve an organization’s operations. It helps an
organization accomplish its objectives by bringing a systematic, disciplined approach
to evaluate and improve the effectiveness of risk management, control, and
governance processes. AICPA and PCAOB auditing standards state that one aspect of
an organization's control environment is management's control methods for monitoring and
following up on performance, including internal auditing.

21-2 The scope of internal auditing has evolved from a primary concern with financial controls to a
scope that includes:

(1) Reviewing and evaluating all types of internal controls,


(2) Evaluating the organization’s risk assessment processes,
(3) Making recommendations regarding the organization’s system of governance, and
(4) Performing other assurance and consulting services for the benefit of management.

21-3 Internal auditing has evolved to meet the needs of business, government, and nonprofit
organizations. Initially, internal auditors supplemented the work of the independent auditors
by helping to ensure the accuracy of the organization's financial information. However, as
organizations became more complex, operational controls became more important, and the
scope of the internal auditors' work expanded to include evaluating and testing financial and
operational controls.
The enactment of the Foreign Corrupt Practices Act also expanded the demand for internal
auditing activities. The accounting provisions of the act require public companies to establish
and maintain effective internal accounting controls. An internal auditing function helps to
ensure that a company complies with these provisions.
The Report of the National Commission on Fraudulent Financial Reporting included a
recommendation that public companies establish and maintain an internal auditing function
staffed with appropriately qualified personnel and fully supported by top management.
Finally, the Sarbanes-Oxley Act of 2002 prohibits auditors from performing internal audit
services for public-company audit clients. This has increased the demand for internal
auditors.

21-4 In addition to knowledge and skills about accounting and auditing, modern internal auditing
requires knowledge in such disciplines as economics, law, finance, statistics, computer
processing, engineering, and taxation.

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