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Chapter 1
Intro to Internal Audit
10
Accounting
Undergraduate 3
10/24/2013

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Cards

Term
American Accounting Association
Definition
- Process of Obtaining Evidence
- Evaluating Evidence
-Regarding assertions about economic actions
- To determine degree of agreement between assertions and established criteria
- Communicate results to users
Term
What is Internal Audit?
Definition
It is a systematic process that determines
1) Financial and operating info is accurate and reliable
2) Risks to business minimized
3) External regulations are followed
4) Operating criteria are met
5) Resources used effectively/effectively
6) Organizations objectives met
Term
What is "independence" in regards to auditors?
Definition
Auditors have to be independent of the activities they audit because independence is extremely important. However, since they are paid by the organization, it is impossible for them to be completely independent.
Term
Missions of Internal vs External Auditors
Definition
External auditors report on the company's entire financial statements while internal auditors only furnish management with needed information.

External auditors have a narrow (limited) view on financial matters while internal auditors are comprehensive in scope.

External auditors only look at material fraud while internal auditors look at any fraud.
Term
What are the three audit approaches
Definition
Financial audits are part of the attest functions and is usually part of external audit.

Compliance audits see if financial and operating controls conform with standards and regulations.

Operational audits review of the organization to increase efficiency, economy of operations and effectiveness of functions.
Term
What are the advantages and disadvantages ?
Definition
Advantages:
Knowledge of code of ethics, Standards for the Professional Practice of Internal Auditing, certification programs, professional association and publications

Disadvantages:
anyone can be an internal auditor
anyone can sign an internal audit report
Term
What do the Standards for the Profession of Internal Auditing do/say?
Definition
They establish a benchmark for internal audit operations, make clear that you achieve independence through organizational status and objectivity, and internal auditors must ALWAYS maintain independence.
Term
What are some things about the Internal Auditor certification?
Definition
- grandfathered 7900 out of 8500 in 1973
- first examination awarded 122 out of 654 in 1974
- More that 35000 awarded by June 2002
- Examination given in eight languages
- Eligibility: advanced degree equal to one year, auditing in CPA firm equal to internal auditing, 2 years of education in school
Term
What are some specialties and industries for Internal Auditing?
Definition
- Healthcare
- Utilities
- Government
- Education
- Information Systems
- Forensics
Term
What internal auditing activities are considered an extension of management?
Definition
- Monitor activities
- Identify and minimize
- validate reports
- protecting reports
- protecting management
- look into the future
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