Final answer:
Auditors might retest records and procedures at year-end if the interim audit was preliminary or if there were substantial post-interim changes. The interim test's purpose is to validate that internal controls are consistently effective. Ethical integrity in reporting, as shown in the mini-case, is crucial for reliable evaluations.
Step-by-step explanation:
When an auditor completes an evaluation at an interim date and concludes that no significant internal control (IC) weaknesses exist, it might still be necessary to test the records and procedures again at year-end. This could be the case if the initial audit was done on a preliminary basis or if there have been significant transactions or changes in the business environment subsequent to the interim date. Testing at year-end ensures that the internal controls remained effective throughout the entire fiscal period and is a standard procedure in financial auditing.
The situation described in the mini-case study points to potential ethical difficulties related to accurate reporting and the integrity of the evaluator. The project manager's request to alter the report to appear more favorable, potentially misrepresenting the actual data, is a significant ethical issue. The evaluator's insistence on maintaining the independence of the evaluation demonstrates a commitment to ethical practices and accurate reporting, ensuring that decisions about future funding are made on the basis of reliable information.