CS Professional · Internal and Forensic Audit · Reporting under Internal Audit
Before using internal auditors of Ganga Steels Ltd. to give direct assistance in the statutory audit, the external auditor obtains a written agreement from the company's authorised representative. What must that agreement state under SA 610 (Revised), and what else is required from the internal auditors?
The entity's authorised representative must agree in writing that the internal auditors will follow the external auditor's instructions and the entity will not intervene. The internal auditors must also agree in writing to keep specified matters confidential and inform the external auditor of any threat to their objectivity.
- AThe Audit Committee will review the internal auditors' work; and the internal auditors give an oral undertaking on independence
- BInternal auditors will follow the external auditor's instructions and the entity will not intervene in their work; and the internal auditors agree in writing to keep specified matters confidential and report threats to objectivityCorrect
- CInternal auditors will report to the CFO on the work; and the internal auditors agree in writing to share working papers with management
- DThe entity may revise the work program during the audit; and the internal auditors confirm competence in writing
Explanation
The standard requires written agreement from an authorised representative that internal auditors will follow the external auditor's instructions and the entity will not intervene, plus written agreement from the internal auditors to keep specified matters confidential and inform the external auditor of any threat to objectivity. The other options contradict this by allowing intervention or relying on oral undertakings.
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