In Assessing the Objectivity of Internal Auditors, the Independent CPA

question 962

Multiple Choice

In assessing the objectivity of internal auditors, the independent CPA who is auditing the entity's financial statements most likely would consider the:

• A) Internal auditing standards developed by The Institute of Internal Auditors.
• B) Tests of internal control activities that could detect errors and fraud.
• C) Materiality of the accounts recently inspected by the internal auditors.
• D) Results of the tests of transactions recently performed by the internal auditors.

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Definitions:

Accounts Receivable

Money owed to a business by its customers for goods or services provided on credit.

Accounts Payable

Accounts payable are amounts a company owes to suppliers for items or services purchased on credit; it is a current liability on the balance sheet.

Nominal Annual Cost

The cost of a product or service stated in current year prices without adjusting for inflation or deflation.

Trade Credit

A type of commercial financing where suppliers allow customers to purchase goods or services and pay for them at a later date.