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CA Intermediate · Auditing and Ethics · Audit of Banks

CA Anita is the statutory central auditor of Deccan Bank. The bank's branch auditors have audited 120 branches, and the central auditor visited 15 other branches personally. For the audit of the bank's financial statements, which statement describes the correct reliance on branch auditors' work?

The central auditor may rely on branch auditors' reports but must consider and evaluate them, using professional judgement on the extent of reliance and consolidation procedures. She remains responsible for the opinion on the bank as a whole, so neither blind acceptance nor full re-audit is required.

  1. ABranch auditors' reports must be accepted without any further consideration by the central auditor
  2. BThe central auditor may rely on branch auditors' reports but must consider them, and the extent of reliance and procedures on the consolidation is her judgement based on SA 600-type principlesCorrect
  3. CThe central auditor should re-audit all branches already covered by branch auditors
  4. DThe central auditor has no responsibility for branches audited by others

Explanation

The central auditor remains responsible for the opinion on the whole bank, must deal with branch auditors' reports as required, and uses judgement in evaluating them and the consolidation. Blind acceptance or full re-audit are both incorrect, and total disclaimer of responsibility is also wrong.

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