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CHAPTER 25 Assurance Services: Internal Auditing and Comprehensive Auditing

CHAPTER 25 Assurance Services: Internal Auditing and Comprehensive Auditing. What is internal auditing ?. What is internal auditing ?. Many organiza- tions employ internal auditors to help the organ- ization achieve greater efficiency and effectiveness. What is internal auditing ?.

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CHAPTER 25 Assurance Services: Internal Auditing and Comprehensive Auditing

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  1. CHAPTER 25Assurance Services: Internal Auditingand Comprehensive Auditing

  2. What is internal auditing?

  3. What is internal auditing? Many organiza- tions employ internal auditors to help the organ- ization achieve greater efficiency and effectiveness.

  4. What is internal auditing? Many organiza- tions employ internal auditors to help the organ- ization achieve greater efficiency and effectiveness. In some corporations, internal auditors also determine whether the financial statements are fairly presented.

  5. How do internal and external auditing differ?

  6. How do internal and external auditing differ? Internal auditors usually focus on improving the efficiency and effectiveness of their employer.

  7. How do internal and external auditing differ? Internal auditors usually focus on improving the efficiency and effectiveness of their employer. External auditors (public accounting firms) usually focus on the fairness of the financial statements of their clients.

  8. There may be very little overlap between the responsibilities of internal and external auditors. internal auditors external auditors

  9. internal auditors external auditors Are external auditors allowed to use internal auditors for direct assistance during an audit of financial statements?

  10. Are external auditors allowed to use internal auditors for direct assistance during an audit of financial statements? YES, if external auditors are confident of internal auditors’: - competence - independence - objectivity

  11. Why would an audit client be willing to allow external auditors to use internal auditors for direct assistance during an audit of financial statements?

  12. Why would an audit client be willing to allow external auditors to use internal auditors for direct assistance during an audit of financial statements? lower audit fees

  13. What is operational auditing?

  14. What is operational auditing? The purpose of operational auditing is to enable an organization to achieve greater effectiveness and efficiency.

  15. What are the differences between operational auditing and financial auditing?

  16. operational auditing financial auditing purpose? purpose? What are the differences between operational auditing and financial auditing? - purpose of the audit

  17. operational auditing financial auditing What are the differences between operational auditing and financial auditing? - purpose of the audit purpose: determination of statement fairness purpose: promotion of efficiency and effectiveness

  18. operational auditing financial auditing distribution? distribution? What are the differences between operational auditing and financial auditing? - purpose of the audit - distribution of the reports

  19. operational auditing financial auditing What are the differences between operational auditing and financial auditing? - purpose of the audit - distribution of the reports distributed to statement users distributed to management

  20. What are the differences between operational auditing and financial auditing? - purpose of the audit - distribution of the reports - inclusion of nonfinancial areas Operational audits cover any aspect of efficiency and effectiveness in an organization.

  21. What are the types of operational audits?

  22. What are the types of operational audits? - a functional audit deals with one or more functions in an organization, e.g., cash receipts

  23. What are the types of operational audits? - a functional audit deals with one or more functions in an organization - an organizational audit deals with an entire organization and how efficiently and effectively functions interact

  24. What are the types of operational audits? - a functional audit deals with one or more functions in an organization - an organizational audit deals with an entire organization and how efficiently and effectively functions interact - special assignments arise at manage- ment’s request and can take a variety of forms

  25. What are the most important qualities of an operational auditor?

  26. What are the most important qualities of an operational auditor? - independence

  27. What are the most important qualities of an operational auditor? - independence - competence

  28. What are the phases of an operational audit?

  29. What are the phases of an operational audit? - the planning phase is similar to that of a financial audit except for the extreme diversity among operational audits ? December

  30. What are the phases of an operational audit? - the planning phase is similar to that of a financial audit except for the extreme diversity among operational audits - the evidence accumulation and evalua- tion phase is also similar to that of a financial audit

  31. What are the phases of an operational audit? - the evidence accumulation and evaluation phase is also similar to that of a financial audit - the reporting and evaluation phase differs from that of a financial audit because the diversity of audits results in carefully-worded reports displaying a lack of standardized wording

  32. Which organizations must follow the Public Sector Accounting and Auditing Board’s Recommendations?

  33. Which organizations must follow the PSAAB Recommendations? Public Sector Entities: - federal, provincial, territorial and local governments - government organizations - school boards Not: - business-type organizations - government not-for-profit organizations

  34. What is a Value-for-Money Audit?

  35. What is a Value-for-Money Audit? General Standards 1. the VFM audit team should collectively possess the necessary knowledge and competence Differs from GAAS

  36. Similar to GAAS What is a Value-for-Money Audit? General Standards 1. the VFM audit team should collectively possess the necessary knowledge and competence 2. Due care and an objective state of mind

  37. Similar to GAAS What is a Value-for-Money Audit? Examination Standards 1. adequate planning and proper execution; proper supervision of team members 2. obtain sufficient appropriate audit evidence

  38. Similar to GAAS Differs from GAAS What is a Value-for-Money Audit? Examination Standards 1. adequate planning and proper execution; proper supervision of team members 2. obtain sufficient appropriate audit evidence 3. criteria for evaluating matters subject to audit should be identified and their suitability assessed

  39. Differs from GAAS What is a Value-for-Money Audit? • Reporting Standards • Report should: • describe the objectives and the scope of audit, including limitations • state examination was performed in accordance with recommended standards and included such tests and other procedures as considered necessary • identify the criteria and describe the findings • state the conclusions

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