SOLUTION MANUAL FOR
d$ d$
d$ Principles Of Auditing And Other Assurance Services
d$ d$ d$ d$ d$ d$ d$
23rd Edition By Ray Whittington Kurt
d$ d$ d$ d$ d$ d$
ALL Chapters (1 - 21)
d$ d$ d$ d$
, Table of Contents d$ d$
Chapter 1: The Role of the Public Accountant in the AmericanEconomy
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
Chapter 2: Professional Standards
d$ d$ d$
Chapter 3: Professional Ethics
d$ d$ d$
Chapter 4: Legal Liability of CPAs
d$ d$ d$ d$ d$
Chapter 5: Audit Evidence and Documentation
d$ d$ d$ d$ d$
Chapter 6: Audit Planning, Understanding the Client, AssessingRisks, and Responding
d$ d$ d$ d$ d$ d$ d$ d$ d$
Chapter 7: Internal Control
d$ d$ d$
Chapter 8: Consideration of Internal Control in an InformationTechnology Environment
d$ d$ d$ d$ d$ d$ d$ d$ d$
Chapter 9: Audit Sampling
d$ d$ d$
Chapter 10: Cash and Financial Investments
d$ d$ d$ d$ d$
Chapter 11: Accounts Receivable, Notes Receivable, andRevenue
d$ d$ d$ d$ d$ d$
Chapter 12: Inventories and Cost of Goods Sold
d$ d$ d$ d$ d$ d$ d$
Chapter 13: Property, Plant, and Equipment: Depreciation andDepletion
d$ d$ d$ d$ d$ d$ d$
Chapter 14: Accounts Payable and Other Liabilities
d$ d$ d$ d$ d$ d$
Chapter 15: Debt and Equity Capital
d$ d$ d$ d$ d$
Chapter 16: Auditing Operations and Completing the Audit
d$ d$ d$ d$ d$ d$ d$
Chapter 17: Auditors’ Reports
d$ d$ d$
Chapter 18: Integrated Audits of Public Companies
d$ d$ d$ d$ d$ d$
Chapter 19: Additional Assurance Services: Historical FinancialInformation
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Chapter 20: Additional Assurance Services: Other Information
d$ d$ d$ d$ d$ d$
Chapter 21: Internal, Operational, and Compliance Auditing
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,CHAPTER 1 d$
The Role of the Publ d$ d$ d$ d$
ic Accountant in the
d$ d$ d$
American Economy d$
Review Questions
d$
1-1 The ―crisis of credibility‖ largely arose from the number of companies that restated their previously i
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
ssued financial statements as a result of accounting irregularities and fraud. Especially responsible
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
werethe very visible Enron and WorldCom fraud cases. Both companies filed for bankruptcy and co
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
nstituted the largest companies in American history to do so. The extent of the accounting irregulari
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
ties and fraud being investigated and disclosed brought into question the effectiveness of financial st
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
atement audits. In addition, the criminal conviction of Arthur Andersen, LLP, one of the then Big 5
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
accounting firms, on charges of destroying documents related to the Enron case brought into questio
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
n the ethics standards of the profession.
d$ d$ d$ d$ d$ d$
1-2 Assurance services are professional services that enhance the quality of information, or its context,
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d
$for decision- d$
making. The two types are: (a) those that increase the reliability of information and (b) those that
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
involve putting information in a form or context that facilitates decision-making.
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
1-3 A financial statement audit is, by far, the most common type of attest engagement. The overall asse
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
rtion,made by management, most frequently is that the financial statements follow generally accepted
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
accounting principles. d$
1-4 A large corporation with securities listed on a stock exchange is required by the rules of the stock ex
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
change and by the rules of the Securities and Exchange Commission to provide an audit report with
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d
$theannual financial statements furnished to its stockholders. It also is required to engage the auditors
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d$to provide an opinion on its internal control. Apart from legal requirements, however, a large liste
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
d corporation recognizes that it must maintain investor confidence in the reliability of its financial sta
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
tements and internal control over financial reporting if it is to continue to be able to secure capital
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d
$from the public. The report by a firm of certified public accountants adds credibility to the financial
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d
$statements prepared by the corporation. When a small family-
d$ d$ d$ d$ d $ d$ d$ d$
owned enterprise elects to have an audit, the purpose usually is to use the auditors' report to support
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
an application for a bank loan.
d$ d$ d$ d$ d$
, 1-5 A report by an independent public accountant concerning the fairness of a company's financial state
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
mentsis commonly required in the following situations:
d$ d$ d$ d$ d$ d$ d$
(1) Application for a bank loan. d$ d$ d$ d$
(2) Establishing credit for purchase of merchandise, equipment, or other assets.
d$ d$ d$ d$ d$ d$ d$ d$ d$
(3) Reporting operating results, financial position, and cash flows to absentee owners (stockhol
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
dersor partners). d$ d$
(4) Issuance of securities by a corporation. d$ d$ d$ d$ d$
(5) Annual financial statements by a corporation with securities listed on a stock exchange or t
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
radedover the counter. d$ d$ d$
(6) Sale of an ongoing business.
d$ d$ d$ d$
(7) Termination of a partnership. d$ d$ d$
1-6 To add credibility to financial statements is to increase the likelihood that they have been prepared f
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
ollowing the appropriate criteria, usually generally accepted accounting principles. As such, an incre
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
asein credibility results in financial statements that can be believed and relied upon by third parties.
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1-7 Business risk is the risk that the investment will be impaired because a company invested in is un
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
able tomeet its financial obligations due to economic conditions or poor management decisions. Inf
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
ormation risk is the risk that the information used to assess business risk is not accurate. Auditors
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d
can directly reduce information risk, but have only limited effect on business risk.
$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
1-8 At the beginning of the century, the principal objective of auditing was the prevention and detection
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
of fraud. Audit work centered on the balance sheet, because the income statement was regarded as h
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
ighly confidential and not for public disclosure. Today, the principal objective of auditing is to for
d$ d$ d$ d$ d$ d$ d $ d$ d$ d$ d$ d$ d$ d$ d$
m an opinion on the fairness of financial statements and their conformity with generally accepted acc
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
ounting principles. But the professional standards also require that an audit be designed to provide r
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
easonable assurance of detecting material misstatements, due to errors or fraud. Particular emphasis
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d $ d$
d$is placed on the income statement which is of great importance to investors. Auditing today also h
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
as the objectives ofmeeting the requirements of the Securities and Exchange Commission (SEC) and
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d
$the Public Company Accounting Oversight Board for public companies.
d$ d$ d$ d$ d$ d$ d$ d$
1-9 The statement is incorrect. The increasing integrated databases of today, along with available
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
auditprocedures make audited entire populations a possibility in many situations.
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
1-10 An operational audit attempts to measure the effectiveness and efficiency of a specific unit of an
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d
$organization. It involves more subjective judgments than a compliance audit or an audit of finan
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
cial statements because the criteria of effectiveness and efficiency of departmental performance a
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
re not asclearly established as are many laws and regulations or generally accepted accounting pr
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
inciples.
The report prepared after completion of an operational audit is usually directed to managem
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
entof the organization in which the audit work was done.
$
d d$ d$ d$ d$ d$ d$ d$ d$ d$
1-11 A compliance audit is an audit to determine whether financial reports or other assertions are in co
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
mpliance with established criteria. The necessary ingredients are verifiable data and the existence of
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
standards established by an authoritative body. An operational audit, on the other hand, is a revie
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
w of adepartment or other unit of a business or governmental organization to measure the effective
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
ness and efficiency of operations. Internal auditors often perform operational audits as do auditors
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
employed by the Government Accountability Office (GAO) of the federal government.
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
1-12 Internal auditors must be independent of the department heads and other line executives whose work
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
theyreview. However, internal auditors are not independent in the same sense as a public accounting
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
d$ d$
d$ Principles Of Auditing And Other Assurance Services
d$ d$ d$ d$ d$ d$ d$
23rd Edition By Ray Whittington Kurt
d$ d$ d$ d$ d$ d$
ALL Chapters (1 - 21)
d$ d$ d$ d$
, Table of Contents d$ d$
Chapter 1: The Role of the Public Accountant in the AmericanEconomy
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
Chapter 2: Professional Standards
d$ d$ d$
Chapter 3: Professional Ethics
d$ d$ d$
Chapter 4: Legal Liability of CPAs
d$ d$ d$ d$ d$
Chapter 5: Audit Evidence and Documentation
d$ d$ d$ d$ d$
Chapter 6: Audit Planning, Understanding the Client, AssessingRisks, and Responding
d$ d$ d$ d$ d$ d$ d$ d$ d$
Chapter 7: Internal Control
d$ d$ d$
Chapter 8: Consideration of Internal Control in an InformationTechnology Environment
d$ d$ d$ d$ d$ d$ d$ d$ d$
Chapter 9: Audit Sampling
d$ d$ d$
Chapter 10: Cash and Financial Investments
d$ d$ d$ d$ d$
Chapter 11: Accounts Receivable, Notes Receivable, andRevenue
d$ d$ d$ d$ d$ d$
Chapter 12: Inventories and Cost of Goods Sold
d$ d$ d$ d$ d$ d$ d$
Chapter 13: Property, Plant, and Equipment: Depreciation andDepletion
d$ d$ d$ d$ d$ d$ d$
Chapter 14: Accounts Payable and Other Liabilities
d$ d$ d$ d$ d$ d$
Chapter 15: Debt and Equity Capital
d$ d$ d$ d$ d$
Chapter 16: Auditing Operations and Completing the Audit
d$ d$ d$ d$ d$ d$ d$
Chapter 17: Auditors’ Reports
d$ d$ d$
Chapter 18: Integrated Audits of Public Companies
d$ d$ d$ d$ d$ d$
Chapter 19: Additional Assurance Services: Historical FinancialInformation
d$ d$ d$ d$ d$ d$
Chapter 20: Additional Assurance Services: Other Information
d$ d$ d$ d$ d$ d$
Chapter 21: Internal, Operational, and Compliance Auditing
d$ d$ d$ d$ d$ d$
,CHAPTER 1 d$
The Role of the Publ d$ d$ d$ d$
ic Accountant in the
d$ d$ d$
American Economy d$
Review Questions
d$
1-1 The ―crisis of credibility‖ largely arose from the number of companies that restated their previously i
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
ssued financial statements as a result of accounting irregularities and fraud. Especially responsible
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
werethe very visible Enron and WorldCom fraud cases. Both companies filed for bankruptcy and co
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
nstituted the largest companies in American history to do so. The extent of the accounting irregulari
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
ties and fraud being investigated and disclosed brought into question the effectiveness of financial st
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
atement audits. In addition, the criminal conviction of Arthur Andersen, LLP, one of the then Big 5
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
accounting firms, on charges of destroying documents related to the Enron case brought into questio
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
n the ethics standards of the profession.
d$ d$ d$ d$ d$ d$
1-2 Assurance services are professional services that enhance the quality of information, or its context,
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d
$for decision- d$
making. The two types are: (a) those that increase the reliability of information and (b) those that
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
involve putting information in a form or context that facilitates decision-making.
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
1-3 A financial statement audit is, by far, the most common type of attest engagement. The overall asse
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
rtion,made by management, most frequently is that the financial statements follow generally accepted
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
accounting principles. d$
1-4 A large corporation with securities listed on a stock exchange is required by the rules of the stock ex
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
change and by the rules of the Securities and Exchange Commission to provide an audit report with
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d
$theannual financial statements furnished to its stockholders. It also is required to engage the auditors
$
d d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
d$to provide an opinion on its internal control. Apart from legal requirements, however, a large liste
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
d corporation recognizes that it must maintain investor confidence in the reliability of its financial sta
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
tements and internal control over financial reporting if it is to continue to be able to secure capital
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d
$from the public. The report by a firm of certified public accountants adds credibility to the financial
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d
$statements prepared by the corporation. When a small family-
d$ d$ d$ d$ d $ d$ d$ d$
owned enterprise elects to have an audit, the purpose usually is to use the auditors' report to support
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
an application for a bank loan.
d$ d$ d$ d$ d$
, 1-5 A report by an independent public accountant concerning the fairness of a company's financial state
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
mentsis commonly required in the following situations:
d$ d$ d$ d$ d$ d$ d$
(1) Application for a bank loan. d$ d$ d$ d$
(2) Establishing credit for purchase of merchandise, equipment, or other assets.
d$ d$ d$ d$ d$ d$ d$ d$ d$
(3) Reporting operating results, financial position, and cash flows to absentee owners (stockhol
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
dersor partners). d$ d$
(4) Issuance of securities by a corporation. d$ d$ d$ d$ d$
(5) Annual financial statements by a corporation with securities listed on a stock exchange or t
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
radedover the counter. d$ d$ d$
(6) Sale of an ongoing business.
d$ d$ d$ d$
(7) Termination of a partnership. d$ d$ d$
1-6 To add credibility to financial statements is to increase the likelihood that they have been prepared f
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
ollowing the appropriate criteria, usually generally accepted accounting principles. As such, an incre
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
asein credibility results in financial statements that can be believed and relied upon by third parties.
$
d d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
1-7 Business risk is the risk that the investment will be impaired because a company invested in is un
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
able tomeet its financial obligations due to economic conditions or poor management decisions. Inf
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
ormation risk is the risk that the information used to assess business risk is not accurate. Auditors
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d
can directly reduce information risk, but have only limited effect on business risk.
$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
1-8 At the beginning of the century, the principal objective of auditing was the prevention and detection
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
of fraud. Audit work centered on the balance sheet, because the income statement was regarded as h
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
ighly confidential and not for public disclosure. Today, the principal objective of auditing is to for
d$ d$ d$ d$ d$ d$ d $ d$ d$ d$ d$ d$ d$ d$ d$
m an opinion on the fairness of financial statements and their conformity with generally accepted acc
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
ounting principles. But the professional standards also require that an audit be designed to provide r
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
easonable assurance of detecting material misstatements, due to errors or fraud. Particular emphasis
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d $ d$
d$is placed on the income statement which is of great importance to investors. Auditing today also h
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
as the objectives ofmeeting the requirements of the Securities and Exchange Commission (SEC) and
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d
$the Public Company Accounting Oversight Board for public companies.
d$ d$ d$ d$ d$ d$ d$ d$
1-9 The statement is incorrect. The increasing integrated databases of today, along with available
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
auditprocedures make audited entire populations a possibility in many situations.
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
1-10 An operational audit attempts to measure the effectiveness and efficiency of a specific unit of an
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d
$organization. It involves more subjective judgments than a compliance audit or an audit of finan
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
cial statements because the criteria of effectiveness and efficiency of departmental performance a
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
re not asclearly established as are many laws and regulations or generally accepted accounting pr
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
inciples.
The report prepared after completion of an operational audit is usually directed to managem
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
entof the organization in which the audit work was done.
$
d d$ d$ d$ d$ d$ d$ d$ d$ d$
1-11 A compliance audit is an audit to determine whether financial reports or other assertions are in co
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
mpliance with established criteria. The necessary ingredients are verifiable data and the existence of
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
standards established by an authoritative body. An operational audit, on the other hand, is a revie
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
w of adepartment or other unit of a business or governmental organization to measure the effective
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
ness and efficiency of operations. Internal auditors often perform operational audits as do auditors
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
employed by the Government Accountability Office (GAO) of the federal government.
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
1-12 Internal auditors must be independent of the department heads and other line executives whose work
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
theyreview. However, internal auditors are not independent in the same sense as a public accounting
d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$ d$
