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CS Professional · Compliance Management, Audit and Due Diligence · Internal Audit and Performance Audit

Mahesh & Co., external auditors of Bharat Cement Ltd, want to judge whether the internal audit function applies a systematic and disciplined approach. Which factor listed in SA 610 (Revised) is relevant?

The relevant factor is the existence, adequacy and use of documented internal audit procedures covering risk assessment, work programs, documentation and reporting, in keeping with the entity's size. Quality control policies also matter. Board membership or full subsidiary coverage are not factors listed for this assessment.

  1. AExistence and use of documented procedures covering risk assessments, work programs, documentation and reporting, commensurate with entity sizeCorrect
  2. BWhether the internal audit head is a member of the board of directors
  3. CWhether the internal audit function reports only to the CFO
  4. DWhether the internal audit function has audited every subsidiary in the group

Explanation

The text lists documented internal audit procedures or guidance on risk assessments, work programs, documentation and reporting, in proportion to the entity's size, and appropriate quality control policies. Board membership, reporting to the CFO or full subsidiary coverage are not listed factors.

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