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CS Professional · Compliance Management, Audit and Due Diligence · Internal Audit and Performance Audit

Before relying on the internal audit function of Sundaram Engineering Ltd, the external auditor reviews whether it applies a systematic and disciplined approach. Which factor is relevant to this determination under SA 610 (Revised)?

The relevant factor is whether documented internal audit procedures exist covering risk assessments, work programmes, documentation and reporting, in line with the entity's size and circumstances. SA 610 (Revised) lists this, together with quality control policies, as indicating a systematic and disciplined approach.

  1. AWhether the internal audit function has more staff than the finance department
  2. BWhether documented procedures cover risk assessments, work programmes, documentation and reporting, commensurate with the entity's sizeCorrect
  3. CWhether the internal audit function was established before the external auditor's appointment
  4. DWhether the audit committee chairman is a chartered accountant

Explanation

The standard lists the existence, adequacy and use of documented internal audit procedures covering risk assessments, work programmes, documentation and reporting, commensurate with size and circumstances, as a factor, along with appropriate quality control policies. Staff numbers, age of the function and the chairman's qualification are not listed factors.

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