Threats Arising from Provision of Non-Assurance Services (5)

Question 1

What might providing internal audit services to an audit client create?

Answer 1

A self-review threat if audit team plan to rely on the work of internal audit department

Question 2

Safeguards for providing internal audit services (management)

Answer 2

Client management remain responsible for evaluation and acting on internal control findings and reporting significant findings with governance

Question 3

Safeguards for providing internal audit services (independent)

Answer 3

Independent partner review to ensure appropriate reliance is placed on internal audit and work is rigouruously audited

Question 4

When must internal audit services not be provided for public interest entities? (reporting)

Answer 4

A significant part of the internal controls over financial reporting

Question 5

When must internal audit services not be provided for public interest entities? (accounting)

Answer 5

Financial accounting systems that generate info that is material to client’s accounting records

Question 6

When must internal audit services not be provided for public interest entities? (disclosures)

Answer 6

Amounts or disclosures that are material to financial statements on which firm will express an opinion

Question 7

What is a threat to objectivity?

Answer 7

From assuming management responsibility may arise if the firm makes decisions on behalf of client when providing internal audit services

Question 8

Safeguard for firms making decision on making decisions on behalf of client when providing audit services

Answer 8

Client is reminded that it must evaluate and determine which recommendations of firm should be implemented