CA Intermediate · Auditing and Ethics · Audit of Banks
CA Tanvi is appointed as statutory central auditor of a nationalised bank. The bank's management proposes that she should rely entirely on the work of the branch auditors and the bank's concurrent auditors, without performing any procedures on the consolidation of branch returns at the head office. Which response best reflects the auditor's responsibility?
The central auditor should reject the proposal, because she is responsible for the opinion on the bank's financial statements as a whole. She must consider the branch auditors' reports and audit the head office consolidation, although she need not personally re-audit every branch.
- AAccept the proposal, since branch auditors are solely responsible for the whole of the financial statements
- BAccept the proposal, since concurrent auditors are appointed by the Board and their work replaces the statutory audit
- CReject the proposal; the central auditor remains responsible for the opinion and must review the branch auditors' reports and examine the consolidation and head office aggregationCorrect
- DReject the proposal, but only because the central auditor must re-audit every branch personally
Explanation
The central auditor expresses the opinion on the bank's financial statements as a whole and so cannot wholly delegate to branch or concurrent auditors. She considers the branch auditors' reports, gives instructions, and audits the consolidation at head office. She is not required to re-audit every branch, so the last option overstates the duty.
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