5.a in The Case That The AI Were To Have Made The Entries Themselves, It Would Ruin Their Function and

MILLORA, ANGELO JAMES W.
MWF 3-4
52677 – BSAC AAI 9/04/20
1. Standards are important for a profession in general, while in Auditing,
 it shows the basic principles that represent the practice of internal auditing
 it provides a frame work for performing and promoting value-adding in internal auditing
 it creates a foundation for the evaluation process of internal audit performance
 helps grow and improve the processes and operations of an organization
2. Refer to Appendix A, “The IIA’s Code of Ethics”, and answer the following questions:
2.a The code promotes ethical cultures to the professionals in a respective field, such as in auditing, towards its
auditors. As a profession which includes an integral part in the documents of another person, a code of ethics is
necessary so as to be able to handle such documents, and objectives in a tactful and professional manner.
2.b In the Code of Ethic’s Principles, it more so expresses the four ideals internal auditors should aspire to maintain in
conducting their work and represent the core values that internal auditors must uphold to earn the trust of those
who rely on their service.
2.c The code of ethics applies to both individuals and entities that provide internal auditing services.
2.d Breaches of the Code of Ethics is evaluated and is coherence with a firm’s bylaws and administration or structure.
An action that is not necessarily mentioned in the rules in writing, does not pardon it from being morally incorrect or
wrong, there is, therefore, a certain liability always being carried around is punishable by disciplinary action if
breached.
3. How does the IIA’s Code of Ethics differ from the standards in governing the behavior and activities of internal
auditors?
 The Code of Ethics states the principles and expectations governing the behavior of individuals and
organizations in the conduct of internal auditing. It includes the minimum requirements for conduct, and
behavioral expectations rather than particular activities. On the other hand, the standard provides guidelines
on the expectations of Internal Audit through attributable standards such as interaction with thtebBoard and
continuing professional growth.
4. The participation of the CAE does not necessarily impair the objectivity of an IA, regardless if it were a part take in the
stock of the client company. The rationale is that such participation should not create a conflict between the interests
of the organization and the duties of the CAE in future reference.
5. The CAE for Sargon Products reports administratively to the CFO and functionally to the audit committee. 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 described below? Briefly explain your answer.
5.a In the case that the AI were to have made the entries themselves, it would ruin their function and
completely impair objectivity in general. Accounting entries would be the responsibility of the accountants of
the firm.
5.b The internal auditor is not performing the independent verification control of reconciling the monthly bank
statements: this is being done by a staff accountant. The internal auditor is testing whether the control is
operating effectively, which is appropriate internal audit task, Accordingly, the internal auditor’s objectivity
would not be considered impaired.
6. Review IG 1000/Purpose, Authority, and Responsibility and answer the following questions.
6.a It is critical to have an internal audit function to have an internal audit charter primarily for management’s
sake. It provides a recognizable statement for review and acceptance by management and for approval by the
board. It monitors a periodic assessment of the adequacy of the internal audit activity purposes. In the case that
problems should arise and there are inquiries, the charter provides an agreement with top management about
the organization’s internal audit activity.
6.b The Internal Audit charter should explicitly define the internal audit activity, its purposes, authority and
responsibilities.
7. You are part of a three-person internal audit function that was asked by your company’s
CEO to conduct an audit of the internal controls over the company’s commodities trading
and hedging activities. No member of the internal audit function has any training or
experience in auditing trading and hedging activities.
7.a & 7.b
1210: Proficiency. This standard states that “Internal auditors must possess the knowledge, skills, and other
competencies needed to perform their individual responsibilities. The internal audit activity collectively must
possess or obtain the knowledge, skills, and other competencies needed to perform its responsibilities.”
1210.A1. This standard states that “The chief audit executive must obtain competent advice and assistance if the
internal auditors lack the knowledge, skills, or other competencies needed to perform all or part of the
engagement.”

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MILLORA, ANGELO JAMES W.

7.a & 7.b

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