Revised Code of Ethics in the Phils - 2010

It systems services general provisions 290201

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Unformatted text preview: ior management, to be responsible at all times for internal audit activities and to acknowledge responsibility for designing, implementing, and maintaining internal control; (b) The client’s management or those charged with governance reviews, assesses and approves the scope, risk and frequency of the internal audit services; (c) The client’s management evaluates the adequacy of the internal audit services and the findings resulting from their performance; (d) The client’s management evaluates and determines which recommendations resulting from internal audit services to implement and manages the implementation process; and (e) The client’s management reports to those charged with governance the significant findings and recommendations resulting from the internal audit services. 290.199 When a firm uses the work of an internal audit function, ISAs require the performance of procedures to evaluate the adequacy of that work. When a firm accepts an engagement to provide internal audit services to an audit client, and the results of those services will be used in conducting the external audit, a self-review threat is created because of the possibility that the 195 audit team will use the results of the internal audit service without appropriately evaluating those results or exercising the same level of professional skepticism as would be exercised when the internal audit work is performed by individuals who are not members of the firm. The significance of the threat will depend on factors such as: • The materiality of the related financial statement amounts; • The risk of misstatement of the assertions related to those financial statement amounts; and • The degree of reliance that will be placed on the internal audit service. The significance of the threat shall be evaluated and safeguards applied when necessary to eliminate the threat or reduce it to an acceptable level. An example of such a safeguard is using professionals who are not members of the audit team to perform the internal audit service. Audit clients that are public interest entities 290.200 In the case of an audit client that is a public interest entity, a firm shall not provide internal audit services that relate to: (a) A significant part of the internal controls over financial reporting; (b) Financial accounting systems that generate information that is, separately or in the aggregate, significant to the client’s accounting records or financial statements on which the firm wi...
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This document was uploaded on 04/03/2014.

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