Over the past several years. Hobble, Inc. has expanded, diversified, and grown both in sales and in profits. Two years ago Hobble's management established an internal audit department that is responsible for evaluating and recommending modifications in control activities, reviewing operations to promote efficiency and economy, and conducting special inquiries at management's direction.

As in prior years. Hobble, Inc. has engaged Plautz & Associates, LLP as independent auditors for the current year, 1999. The partner in charge of the Hobble audit has made an appointment with the manager of Hobble's internal audit department to discuss the progress of the department, including new personnel and new activities.

The partner needs this information to plan the scope of the audit and to determine the amount of assistance that will be needed from the internal audit department.

Required: 

The scope of an independent audit can be modified if a competent internal audit department exists. What characteristics of Hobble's internal audit department and of its work should Plautz & Associates evaluate when establishing the scope of the financial statement audit?