Lesson 3: Ethical, Legal & Pro Issues

Question 1

Ethical standards can affect the _________ of an individual and org. to conduct audits.

Answer 1

eligibility

Question 2

T or F

Credibility is a core requirement of both auditors and audit programs.

Answer 2

T

Question 3

If an Auditor has a conflict of interest with an audit, what two things must be done?

Answer 3

1. Disclose the conflict

2. Decline to conduct the audit

Question 4

Conflict of interest can stem from:
1.
2.
3.

Answer 4

1. Money - Exchange or promise of something with monetary value.
2. Relationships - Business or personal relationships
3. Auditing of own work

Question 5

What is the accepted norm between previously working for an org. and subsequently auditing it?

Answer 5

2 - 3 years

Question 6

T or F

As an Auditor, a conflict of interest with an Auditee can result from being involved with implementing controls to be audited.

Answer 6

T

Question 7

T or F

As long as an Auditor is always professional, very good or bad relationships with an Auditee, or those close to them, have no effect o audit credibility.

Answer 7

F - Extreme relationships, whether good or bad, have the potential to create conflict of interest and subsequent credibility concerns.

Question 8

For all audits, conflict of interest situations must be avoided so audit results are _________ and _________ to maintain audit _________.

Answer 8

objective / impartial / credibility

Question 9

Remember, to avoid conflict of interest:
1.
2.
3.

Answer 9

1. No gifts or money
2. No relationships
3. Not your own work

Question 10

What is required prior to disclosure of business affairs or technical processes of any present or former employer or client?

Answer 10

Consent

Question 11

T or F

Auditors must not disclose proprietary information gained during an audit.

Answer 11

T

Question 12

When should the need for confidentiality agreements or security clearances be determined?

Answer 12

Prior to the audit as it may affect audit team selection.

Question 13

Confidentiality agreements should be limited to __________ info and have a release when:
1.
2.

Answer 13

proprietary

1. A specified time has elapsed
2. The information becomes part of the public domain

Question 14

All audit evidence and reports are confidential from the Auditors perspective, and must be ___________.

Answer 14

safeguarded

Question 15

T or F

Auditors need not be concerned with viewing highly sensitive material if approved.

Answer 15

F - Highly sensitive material should be avoided, even if approved, unless absolutely required to accomplish a successful audit.

Question 16

T or F

An Auditor is obligated to report ________ or _________ conditions to the client.

Answer 16

F

unethical / unsafe

Auditors must first report unethical or unsafe behavior to their Lead Auditor prior to the client.

Question 17

Response guidelines to unethical or unsafe behavior include what four steps?

Answer 17

1. Assessment
2. Verification
3. Notification
4. Legal counsel if risks

Question 18

T or F

Auditors and auditing org’s have no liability for decisions clients make based on audit info, only for actual audit results.

Answer 18

F

Auditors and auditing org’s are liable for erroneous audit results / guidance and subsequent decisions made by clients based on that info.

Question 19

Due care means normal care according to reasonable expectations with an absence of __________.

Answer 19

negligence

Question 20

T or F

An Auditor can be held liable for bad advice on how to resolve a problem or for the cost of resolution if a less expensive solution was available that should have been known of.

Answer 20

T

Question 21

Regarding audit records, there should be a procedure for _________ and _________ of records.

Answer 21

release (authorized) / destruction

Question 22

T or F

When a potential conflict of interest exists, the first step for the Lead Auditor is to remove the Auditor from the team.

Answer 22

F - Must first determine if conflict exists, then remove if necessary.

Question 23

Hostile Auditee attitude countermeasures include what two aspects?

Answer 23

1. Ensure at least two auditors

2. Be prepared to discuss grievance and complaint procedures