Question

An internal auditor performed a formal consulting engagement for XYZ Corporation on June 1, Year 1. When is the earliest time the auditor can perform assurance services for XYZ Corporation and be considered independent and objective?

A. June 1, Year 2.
B. July 1, Year 1.
C. January 1, Year 2.
D. June 2, Year 1.

Answer 1

The earliest time the auditor can perform assurance services for XYZ Corporation and be considered independent and objective is June 2, Year 1. Option D is correct.

Step-by-step explanation:

The earliest time the auditor can perform assurance services for XYZ Corporation and be considered independent and objective is option D. June 2, Year 1.

The reason for this is that performing a formal consulting engagement for XYZ Corporation on June 1, Year 1, establishes a direct relationship between the auditor and the corporation. To maintain independence and objectivity, the auditor needs to have a cooling-off period before conducting any assurance services for XYZ Corporation. This cooling-off period ensures that the auditor can approach the assurance services objectively without any bias or conflict of interest.

By choosing June 2, Year 1, the auditor allows a day to pass after the consulting engagement. This day allows for the separation of roles and responsibilities, ensuring that the auditor can approach the assurance engagement with the necessary independence and objectivity.