Study Unit 2 - Independence, Obejectivity & Due Care

Question 1

Impairments to independence or Objectivity

Answer 1

1. Conflicts of Interest
2. Scope limitations
3. Restrictions on access to records, personnel, & properties
4. Resource limitations (i.e. funding)
   1. Conflicts of Interest
5. Scope limitations
6. Restrictions on access to records, personnel, & properties
7. Resource limitations (i.e. funding)

Question 2

Impairment of Objectivity related to prior assignments:

Answer 2

Within 1 year:

1. Assurance Services – NO
2. Consulting Services - OK

Question 3

Internal auditors must exercise due professional care by considering the:

Answer 3

1. Extent of work needed to achieve the engagement’s objectives
2. Complexity, materiality, or significance of matters to which assurance procedures are applied
3. Adequacy and effectiveness of governance, risk management, and control processes
4. Probability of significant errors, fraud, or noncompliance
5. Cost of assurance in relation to potential benefits (Impl. Std. 1220.A1)

Question 4

Assurance procedures alone do not guarantee

Answer 4

that all significant risks will be identified

Question 5

Auditors must have PROFICIENCY in:

Answer 5

1. Internal audit standards
2. Accounting principles & techniques
   (Paul is A Student)

Question 6

Auditors must have KNOWLEDGE of:

Answer 6

1. Fraud Indicators
2. Key IT risks
   (Katie Fixes Information Technology)

Question 7

Auditors must have UNDERSTANDING of:

Answer 7

1. Management principles (Under My Pillow)

Question 8

Auditors must have an APPRECIATION for:

Answer 8

1. Accounting
2. Economics
3. Commercial Law
4. Tax
5. Fraud
6. IT
   (An Acct’g Education Lets Tim Feel Intelligent)