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CA Intermediate · Auditing and Ethics · Risk Assessment and Internal Control

During the audit of Mehta Auto Components Pvt Ltd, the auditor tests the company's control that requires a manager to review and approve every supplier master-data change. The test of controls over a sample of changes shows the control operated effectively during the first nine months. For the remaining three months, what does SA 330 expect the auditor to do if he intends to rely on the control for the full year?

The auditor should obtain additional evidence for the remaining three months, such as inquiry about significant changes and further testing where needed. SA 330 requires evidence covering the period of intended reliance, so interim results cannot be assumed to continue and management certification is not sufficient.

  1. AObtain evidence about significant changes in the control during the remaining period, such as through inquiry or additional testsCorrect
  2. BAssume the control operated effectively for the full year without further work
  3. CAbandon reliance and perform only analytical procedures
  4. DAsk management to certify that the control operated all year

Explanation

When controls are tested at an interim date, the auditor must obtain evidence on whether the controls changed or operated in the remaining period, considering significance of risk and the length of the remaining period. Assuming effectiveness or relying on certification is not enough evidence.

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