CA Final · Advanced Auditing, Assurance and Professional Ethics · Audit Evidence

Auditor Meera Iyer is auditing Deccan Steels Ltd. The finance head states in an inquiry that the controls over dispatch approvals operated effectively throughout the year and offers no documents. Meera plans to conclude on control effectiveness based on this inquiry. Which is correct under SA 500?

Meera should not rely on inquiry alone. Inquiry may be important evidence, but ordinarily it does not by itself give sufficient audit evidence of operating effectiveness of controls, so she should combine it with procedures like inspection, observation or reperformance.

1. AInquiry from a senior officer is enough to conclude on operating effectiveness of controls
2. BInquiry alone ordinarily does not provide sufficient audit evidence of the operating effectiveness of controls, so it should be combined with other procedures such as inspection or reperformanceCorrect
3. CInquiry is never acceptable as an audit procedure
4. DInquiry is sufficient if the finance head is a Chartered Accountant