Question

CASE 1 CHAPTER 1 Internal Auditing Assurance and Advisory Services Third Edition

1. How do internal and external auditors differ and how should they
relate?
2. How does internal audit maintain its independence and objectivity?
3. Is it mandatory to have an internal audit activity?
4. What are the critical skills and attributes of a CAE?
5. What are the skill sets and staffing needs of an internal audit
activity?
6. What is internal audit’s role in preventing, detecting, and
investigating fraud?
7. What services can the internal auditors provide for the audit
committee?
8. What should be the reporting lines for the CAE?
9. What standards guide the work of internal audit professionals?
10. Why should an organization have an audit committee?

Answer 1

1. An internal audit is an independent appraisal function as a service to all levels of management whereas an external audit is an independent audit of financial information of an entity to express a view there on.

Any audit is done to assess the internal and external control related to financial statements and thus both intenal and external audit should relate to improve the financial reporting parameters of an entity.

2.Independence and objectivity play a prime role for an internal auditor to carry out his responsibilities free from bias. To ensure independence, the internal auditor has unrestricted access to the seniormost management.Objectivity can be ensured by not letting the auditors judgement be influenced by any external party.

C) Internal audit is the internal checklist and analysis of an organization. It is a very useful activity but not mandatory.

D) The critical skills and attributes of a CAE are as follows:

- Professional competence

- Integrity

- Courage

- Presence and confidence