1. Steve Ankenbrandt, president of Beeb Corp., has been discussing the companys internal operations with the presidents of several other multi-division companies. Ankenbrandt discovered that most of them have an internal audit staff. The activities of the staffs at other companies include financial audits, operational audits, and sometimes compliance audits.

Required:

Describe the meaning of the following terms as they relate to the internal auditing function:

a. Financial auditing.

b. Operational auditing.

c. Compliance auditing.

2. Throughout this book, emphasis has been placed on the concept of independence as the most significant single element underlying the development of the public accounting profession. The term independent auditor is sometimes used to distinguish the public accountant from an internal auditor. Nevertheless, The Institute of Internal Auditors points to the factor of independence as essential to an effective program of internal auditing. Distinguish between the meaning of independence as used by the American Institute of Certified Public Accountants in describing the function of the certified public accountant and the meaning of independence as used by The Institute of Internal Auditors to describe the work of the internal auditor.