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Unit 1 assignment
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1Unit 1 Assignment
TERRI L GREENFIELD
Purdue Global University
AC503: Advanced Auditing
Kim Riley
July 11, 2024
, 2
Unit 1 Assignment
Chapter 1
1-19: (Types of audits and auditors) J. Cowan, an engineer, is the president of Arco
Engineering. At a meeting of the board of directors, Cowan was asked to explain why audits of
the company are made by (1) internal auditors, (2) independent auditors, and (3) government
auditors. One board member suggested that the company’s total audit expense might be lower if
all auditing was done by internal auditors. J. Cowan was unable to distinguish between the three
types of auditors or to satisfactorily respond to the board member’s suggestion.
Required
A) Explain the different kinds of audits made by each type of auditor
B) Identify the sources of practice standards applicable to each type of auditor.
C) Comment on the board member’s suggestion to have all auditing done by internal
auditors.
Answer
Among all of the audits that an internal auditor may conduct are compliance, internal
financial, environmental, technological, performance, and operational audits. The firm also
benefits from having an auditor on staff to monitor the integrity and compliance of the financial
statements because SOX legally makes management accountable for the veracity of their
financial statements. An internal auditor would be beneficial to the organization if it could afford
to hire one. Finding operational areas where there could be inefficiencies is helpful. The Institute
of Internal Auditors, or IIA, is to oversee this.
Independent auditors, who are often CPAs, examine the company’s financial statements.
They have no connection whatsoever to the business. This will help to prevent conflicts of
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