©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 26 - 1 Internal and Governmental Financial Auditing and Operational Auditing Chapter 26 This is trial version www.adultpdf.com ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 26 - 2 Learning Objective 1 Explain the role of internal auditors in financial auditing. This is trial version www.adultpdf.com ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 26 - 3 Internal Auditing  The New York Stock Exchange requires its registrants to have an internal audit function This is trial version www.adultpdf.com ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 26 - 4 Internal Auditing It is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes. This is trial version www.adultpdf.com ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 26 - 5 Institute of Internal Auditors Ethical Principles  Confidentiality  Objectivity  Competency This is trial version www.adultpdf.com ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 26 - 6 Institute of Internal Auditors Rules of Conduct  Integrity  Confidentiality  Objectivity  Competency This is trial version www.adultpdf.com ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 26 - 7 Relationship of Internal and External Auditors  The external auditor is responsible to financial statement users  The internal auditor is responsible to management Differences: This is trial version www.adultpdf.com ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 26 - 8 Relationship of Internal and External Auditors  Competency  Methodology  Objectivity  Audit risk model Similarities: This is trial version www.adultpdf.com ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 26 - 9 Learning Objective 2 Describe the auditing and reporting requirements under Government Auditing Standards and the Single Audit Act This is trial version www.adultpdf.com ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 26 - 10 Governmental Financial Auditing The primary source of authoritative literature for performance of government audits is Government Auditing Standards, which is issued by the GAO. Because of the color of the cover, it is usually referred to as the “Yellow Book.” This is trial version www.adultpdf.com . Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 26 - 1 Internal and Governmental Financial Auditing and Operational Auditing Chapter 26 This is trial version www.adultpdf.com ©2008. Business Publishing, Auditing 12/e, Arens/Beasley/Elder 26 - 9 Learning Objective 2 Describe the auditing and reporting requirements under Government Auditing Standards and the Single Audit Act This. Publishing, Auditing 12/e, Arens/Beasley/Elder 26 - 10 Governmental Financial Auditing The primary source of authoritative literature for performance of government audits is Government Auditing Standards, which