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CA Intermediate · Auditing and Ethics · Audit of Banks

CA Deepa is the statutory central auditor of a scheduled commercial bank and is planning to rely on the work of concurrent auditors and the bank's internal inspection department. Which approach is consistent with the Standards on Auditing?

The auditor may use the work of concurrent auditors and internal inspectors after assessing their objectivity, competence and work quality, but remains solely responsible for the audit opinion. Responsibility cannot be reduced or delegated, and signing the report cannot be passed to others.

  1. AShe may rely fully on their reports and reduce her responsibility accordingly
  2. BShe may use their work after evaluating their objectivity, competence and the quality of their work, but she remains solely responsible for her audit opinionCorrect
  3. CShe must ignore their work entirely because they are employees or appointees of the bank
  4. DShe may delegate the signing of the audit report to the concurrent auditor

Explanation

Under SA 610, the external auditor may use internal auditors' work after evaluating objectivity, competence and systematic approach. The external auditor's responsibility for the opinion is not reduced. Total reliance or total disregard is incorrect, and signing cannot be delegated.

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