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

Meridian Pharma's statutory auditor treats accounts receivable valuation as a higher-risk area and wants direct assistance from internal auditors. Which assignment is appropriate under SA 610 (Revised)?

Checking the accuracy of the receivables ageing is appropriate. SA 610 (Revised) notes that where judgment and risk are significant, work is limited; evaluating the adequacy of the provision involves more than limited judgment and so should not be assigned to internal auditors providing direct assistance.

AChecking the accuracy of the receivables ageingCorrect
BEvaluating the adequacy of the provision for doubtful debts based on the ageing
CDeciding the final audit conclusion on receivable valuation
DDetermining the materiality level for receivables

Explanation

The standard gives this very example: checking the accuracy of the ageing may be assigned, but evaluating the adequacy of the provision involves more than limited judgment and should not be assigned. Where judgment and risk are higher, less work can be assigned to internal auditors providing direct assistance.

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