The CAE for Sargon Products reports administratively to the CFO and functionally
ID: 2419570 • Letter: T
Question
The CAE for Sargon Products reports administratively to the CFO and functionally to the audiy commitee. The scope of the internal audit function assurance services includes financial, operational, and compliance engagements.
Is the internal auditors' objectivity regarding accounting-related matters impaired in each of the situations descibed below? Briefly explain your answer.
a. The internal auditors are frequently asked to make accounting entries for complex transactions that the company's accountants do not have the expertise to handle.
b. A staff accountant reconciles the company's monthly bank statements. An internal auditor reviews the bank reconciliations to make sure they are completed properly.
Explanation / Answer
a) In this case the objectivity of the internal auditor is impaired This is because , if the person doing the work is also checking it , the objectivity cannot come into play This is so as it becomes difficult to view your own work objectively b) In this case , the internal auditors objectivity will not be hampered, as the there is division of work between the staff and the internal auditor As the accountant is doing the work and the internal auditor is checking it
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