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CA Final · Advanced Auditing, Assurance and Professional Ethics · Audit Planning, Strategy and Execution

CA Tanvi is auditing Orchid Pharma Ltd and plans to rely on the internal audit function for part of the work. She has the internal audit reports for the year and a plan of its proposed work for the next six months. Which statement best reflects how she should decide the areas and extent of use under SA 610 (Revised)?

She should consider the nature and scope of the work internal audit has performed or plans to perform, and its relevance to her overall audit strategy and audit plan. That consideration is the basis for deciding where and how far its work can be used.

  1. AShe should consider the nature and scope of work performed or planned by internal audit and its relevance to her overall audit strategy and audit planCorrect
  2. BShe should use internal audit work in all areas covered by its reports, since the work is relevant to the company
  3. CShe should consider only the work already performed, because planned work cannot be evidence
  4. DShe should leave the decision to the audit committee, which determines the extent of use

Explanation

SA 610 (Revised) requires the auditor to consider the nature and scope of work performed or planned by the internal audit function and its relevance to the overall audit strategy and plan, as a basis for deciding areas and extent of use. Options B and C ignore this test, and the decision belongs to the auditor, not the audit committee.

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