PINALAYA NIYA CO. has an internal audit department consisting of a manager and three staff auditors. Momon, audit manager, is aware that the external auditors have relied on the internal audit function to a substantial degree in the past. However, in recent months, the external auditors have suggested there may be a problem related to the objectivity of the internal audit function. This objectivity problem may result in more extensive testing and analysis by the external auditors. Following independent scenarios are as follows: One of the internal auditors assisted in the preparation of policy statements on internal control. These statements included such things as policies regarding sensitive payments and standards of control for internal controls. The bank statements of the corporation are reconciled each month as a regular assignment for one of the internal auditors. The corporate controller believes this strengthens internal controls because the internal auditor is not involved in the receipt and disbursement of cash. The internal auditors are asked to review the budget data in every area each year for relevance and reasonableness before the budget is approved. In addition, an internal auditor examines the variances each month, along with the associated explanations. These variance analyses are prepared by the corporate controller’s staff after consultation with the individuals involved. Which of the situations have resulted to the objectivity of internal auditors being impaired? Group of answer choices 1-impaired, 2-impaired, 3-impaired 1-not impaired, 2-not impaired, 3-not impaired 1-impaired, 2-not impaired, 3-impaired 1-not impaired, 2-impaired, 3-not impaired

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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43.

PINALAYA NIYA CO. has an internal audit department consisting of a manager and three staff auditors. Momon, audit manager, is aware that the external auditors have relied on the internal audit function to a substantial degree in the past. However, in recent months, the external auditors have suggested there may be a problem related to the objectivity of the internal audit function. This objectivity problem may result in more extensive testing and analysis by the external auditors. Following independent scenarios are as follows:

One of the internal auditors assisted in the preparation of policy statements on internal control. These statements included such things as policies regarding sensitive payments and standards of control for internal controls.
The bank statements of the corporation are reconciled each month as a regular assignment for one of the internal auditors. The corporate controller believes this strengthens internal controls because the internal auditor is not involved in the receipt and disbursement of cash.
The internal auditors are asked to review the budget data in every area each year for relevance and reasonableness before the budget is approved. In addition, an internal auditor examines the variances each month, along with the associated explanations. These variance analyses are prepared by the corporate controller’s staff after consultation with the individuals involved.

Which of the situations have resulted to the objectivity of internal auditors being impaired?

Group of answer choices

1-impaired, 2-impaired, 3-impaired

1-not impaired, 2-not impaired, 3-not impaired

1-impaired, 2-not impaired, 3-impaired

1-not impaired, 2-impaired, 3-not impaired

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