Question

An internal auditor engages in the preparation of income tax forms during tax season. For which of the following activities would the auditor most likely be considered in violation of the IIAs Code of Ethics?

Select one:
a. Preparing the personal tax return, for a fee, for one of the company's divisional managers.
b. Appearing on a radio show on the local public broadcasting station to discuss retirement planning and tax issues.
c. Teaching an evening tax class, for a fee, at the local junior college.
d. On the weekends, working on an hourly basis for a friend who has a small CPA firm.

Answer 1

An internal auditor engaging in the preparation of income tax forms for a divisional manager within the company would likely be considered in violation of the IIAs Code of Ethics.

Step-by-step explanation:

The code of ethics for internal auditors places restrictions on certain activities to ensure objectivity and independence. In this scenario, the auditor would most likely be considered in violation of the code of ethics if they were preparing the personal tax return, for a fee, for one of the company's divisional managers. This is because by preparing the tax return for the company's manager, the auditor would be compromising their independence and objectivity, which are essential in maintaining the integrity of the audit function.

On the other hand, appearing on a radio show on the local public broadcasting station to discuss retirement planning and tax issues, teaching an evening tax class at the local junior college for a fee, or working on an hourly basis for a friend who has a small CPA firm on the weekends are not considered violations of the code of ethics. These activities are outside the scope of the auditor's role as an internal auditor and do not pose threats to their independence and objectivity in their primary auditing function.