Scope of service the objective of internal auditing

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Scope of Service The objective of internal auditing is service to “the organization,” not just to management or some narrow internal interest group. Internal auditors, exercising their objectivity, function for the benefi t of the whole organization—whether represented by the board of directors, the chief executive offi cer, the chief fi nancial offi cer, or other executives. The services provided by internal auditors include (1) audits of fi nancial reports and account- ing control systems; (2) reviews of control systems that ensure compliance with company policies, plans, and procedures and with laws and regulations; (3) appraisals of the economy and effi ciency of operations; and (4) reviews of effectiveness in achieving program results in comparison with established objectives and goals. Internal auditors often make recommendations that result in additional profi ts or cost savings for their companies. In this capacity, they function like management consultants, and this is referred to as operational auditing . The Office of the Auditor General of Canada shares these elements of expanded-scope services with internal auditors. The OAG, however, emphasizes the accountability of pub- lic officials for the efficient, economical, and effective use of public funds and other resources. It defines and describes expanded-scope governmental auditing in terms of the types of government audits that can be performed, which are as follows: 1. Financial Statement Audits (PS 5200) a. Financial statement audits determine (1) whether the fi nancial statements of an audited entity present fairly the fi nancial position, results of operations, and cash fl ows or changes in fi nancial position in conformity with generally
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660 PART IV Other Professional Services accepted accounting principles; and (2) whether the entity has complied with laws and regulations for transactions and events that may have a material effect on the fi nancial statements. 2. Compliance Audits (PS 5300) Compliance audits are those in which audit mandates are required to do one or more of the following: a. Express an opinion on whether an entity complied with specifi ed authorities or whether its transactions were carried out in compliance with specifi ed authorities. b. Express an opinion on whether the transactions that have come to their notice in the cause of discharging their other audit responsibilities were carried out in compliance with specified authorities. c. Report instances of noncompliance with authorities observed in the course of discharging their audit responsibilities. 3. Value-for-Money (Performance) Audits (PS 5400) a. Economy and efficiency audits include determining (1) whether the entity is acquiring, protecting, and using its resources (such as personnel, property, and space) economically and efficiently; (2) the causes of inefficiencies or uneco- nomical practices; and (3) whether the entity has complied with laws and regula- tions concerning matters of economy and efficiency.
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  • Fall '12
  • Smith
  • Accounting, Accountant, Auditor's report, CICA Handbook

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