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Doge & Co (Mar/Jun 22)
I came across this question:
“Keengan Co, an existing audit client … has approached Doge & Co to enquire as to whether it could provide internal audit services.”
“The materiality of the financial statement amounts affected by the internal audit services should be considered when evaluating the significance of any self-review threat (TRUE)”So does that mean auditor can provide internal audit services (or internal control services) to the audit client as long as the effect is not material?
(my understanding is that internal audit services is same thing as internal control advisory services)
For any service to an audit client, one of the financial statements. It is highly likely that the scope of an internal audit function would include “financial compliance” which might include, for example, providing the board of directors with some assurance about the operating effectiveness of internal controls.
The auditor could not then perform the internal audit service if the client were a listed/public interest client. If the client were “non-PIE”, the auditor might be able to provide the service as long as it is possible to implement safeguards to reduce any threat to the fundamental principles to an acceptable level.
Generally, if something is not material “no-one cares” (but don’t write that in the exam”) – by definition, users of financial statements cannot be affected by it.
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