ACCA Strategic Professional · Advanced Audit and Assurance (International) · Specific assignments
Brightwater Energy asks its auditor to provide assurance on its greenhouse gas statement. The auditor finds that the company measures emissions using methods it designed itself, which are not documented and cannot be compared with other entities. Which ISAE 3000 (Revised) requirement is most directly challenged by this finding?
The requirement for suitable criteria is challenged. Undocumented, entity-designed measurement methods are unlikely to be reliable, neutral or understandable, so the practitioner has no proper benchmark for evaluating emissions, and may need to modify the conclusion or decline the engagement.
- AThe need for the practitioner to be independent of the responsible party
- BThe need for suitable criteria against which the subject matter is evaluatedCorrect
- CThe need to obtain a management representation letter
- DThe need to rotate the engagement partner after seven years
Explanation
ISAE 3000 requires criteria to be suitable, meaning relevant, complete, reliable, neutral and understandable. Undocumented, self-designed methods that cannot be compared fail the reliability and understandability tests. Independence and representations are separate requirements and are not affected by the finding described.
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