Internal auditing is an independent objective assurance and consulting activity.

Required

a. Differentiate between independence and objectivity.

b. Can the internal auditor attain the same level of objectivity in an audit as the external auditor? Explain.

c. Under what conditions would performing consulting activities impair either the independence of the internal audit department or the objectivity of the internal auditor? Can the internal audit department adequately control the threats to independence or objectivity?

d. A trading partner of a company wants some assurances about the integrity and security of computer processing.

The following is known about the internal audit department:

1. The internal audit department undergoes periodic external peer reviews to address the quality of its audits and the compliance of the audits with the Standards for the Professional Practice of Internal Auditing. The peer reviews also examine the quality control procedures used by the department.

2. The internal audit department has a history of hiring high-quality staff and subsequently placing that staff in management positions.

3. The company has a reputation for hiring technologically competent auditors.

Assume that as a trading partner, you want some assurance about the integrity of the client’s computer system, especially as it pertains to doing e-business. Present the arguments for and against obtaining assurances about the computer system from the internal audit department rather than an external audit firm.