ACCA Strategic Professional · Advanced Audit and Assurance (International) · International regulatory frameworks for audit and assurance services
Delmar Co is audited by Rowan LLP. During the audit of inventory, the engagement team concludes that one specific requirement in an applicable ISA is not relevant because the circumstances it addresses do not exist at Delmar Co. What is the correct approach under ISA 200?
The team does not have to comply with that requirement. ISA 200 says a requirement is relevant only if the circumstances it addresses exist, for example where it is conditional and the condition is absent. The auditor must still comply with every requirement that is relevant.
- AThe team need not comply with that requirement, as a requirement is relevant only where the circumstances addressed existCorrect
- BThe team must perform the procedure anyway and document why it was pointless
- CThe team must withdraw from the engagement because ISAs cannot be partly applied
- DThe team must apply the requirement but may reduce the sample size
Explanation
ISA 200 says the auditor must comply with each requirement unless, in the circumstances of the audit, the whole ISA is not relevant or the requirement is not relevant because it is conditional and the condition does not exist. So no compliance is needed here. The other options impose obligations the ISAs do not require.
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