Question

Consulting services

A. Are a natural extension of assurance and investigative services and may represent informal or formal advice, analysis, or assessments.
B. To be performed by the internal audit activity should be authorized by management if they do not represent a conflict of interest.
C. May enhance the auditor's understanding of business processes or issues related to an assurance engagement but will always impair the auditor's or the internal audit activity's independence.
D. Should not be performed by the internal audit activity because they impair objectivity.

Answer 1

Consulting services are a natural extension of assurance and investigative services. They can enhance understanding of business processes but may impair independence.

Step-by-step explanation:

Consulting services are a natural extension of assurance and investigative services. They can involve providing advice, analysis, or assessments, both in formal and informal settings.

When performed by the internal audit activity, consulting services should be authorized by management as long as they do not represent a conflict of interest.

Although consulting services may enhance the auditor's understanding of business processes or issues related to an assurance engagement, they will always impair the auditor's or the internal audit activity's independence.

However, it is not accurate to say that consulting services should not be performed by the internal audit activity just because they impair objectivity. In certain situations, consulting services can provide valuable insights and expertise to improve a company's operations.