Revised Code of Ethics in the Phils - 2010

If the firms personnel assume a

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Unformatted text preview: f internal audit activities vary widely and dependon the size and structure of the entity and the requirements of managementand those charged with governance. Internal audit activities may include: • Monitoring of internal control – reviewing controls, monitoring theiroperation and recommending improvements thereto; • Examination of financial and operating information – reviewing themeans used to identify, measure, classify and report financial andoperating information, and specific inquiry into individual itemsincluding detailed testing of transactions, balances and procedures; • Review of the economy, efficiency and effectiveness of operatingactivities including nonfinancial activities of an entity; and • Review of compliance with laws, regulations and other externalrequirements, and with management policies and directives and otherinternal requirements. 290.196 Internal audit services involve assisting the audit client in the performanceof its internal audit activities. The provision of internal audit services to anaudit client creates a self-review threat to independence if the firm uses theinternal audit work in the course of a subsequent external audit. Performinga significant part of the client’s internal audit activities increases thepossibility that firm personnel providing internal audit services will assumea management 73 responsibility. If the firm’s personnel assume a managementresponsibility when providing internal audit services to an audit client, thethreat created would be so significant that no safeguards could reduce thethreat to an acceptable level. Accordingly, a firm’s personnel shall notassume a management responsibility when providing internal audit servicesto an audit client. 290.197 Examples of internal audit services that involve assuming managementresponsibilities include: • Setting internal audit policies or the strategic direction of internalaudit activities; • Directing and taking responsibility for the actions of the entity’sinternal audit employees; • Deciding which recommendations resulting from internal auditactivities shall be implemented; • Reporting the results of the internal audit activities to those chargedwith governance on behalf of management; • Performing procedures that form part of the internal control, such asreviewing and approving changes to employee data access pri...
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