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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Using the work of others

Linden & Co audits Fairway Ltd and wants to use the internal audit function's testing of inventory controls in the year-end audit. Which approach is consistent with ISA 610 (Revised 2013)?

The auditor should assess the internal audit function's objectivity, competence and systematic approach, and evaluate the adequacy of the specific work to be used. The external auditor retains sole responsibility for the opinion, so there is no report reference, no unsupervised reliance and no automatic trust in employees.

  1. AEvaluate the function's objectivity, competence and systematic approach, and perform procedures to evaluate the adequacy of the specific work, while retaining sole responsibility for the opinionCorrect
  2. BRely fully on the work because internal auditors are employees and know the business best
  3. CUse internal auditors to provide direct assistance on high-risk judgements such as estimates without supervision
  4. DRefer to internal audit's work in the auditor's report to demonstrate reliance

Explanation

ISA 610 requires the external auditor to evaluate the internal audit function's objectivity, competence and disciplined approach, and to test its work. Responsibility cannot be reduced by reliance, so no reference in the report, and direct assistance must be directed, supervised and reviewed and not used for highly judgemental areas.

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