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CA Final · Advanced Auditing, Assurance and Professional Ethics · Audit Planning, Strategy and Execution

Midway through the audit of Gokul Foods Ltd, CA Neha finds that the internal audit function's work plan covers store-level cash controls, which is relevant to her audit. Before deciding the areas and extent of use of that work, what must she consider under SA 610 (Revised)?

She must consider the nature and scope of the work performed or planned by the internal audit function and its relevance to her overall audit strategy and audit plan. SA 610 (Revised) makes this the basis for deciding the areas and extent to which that work can be used.

  1. AOnly the internal audit head's seniority within the company
  2. BThe nature and scope of work performed or planned by the internal audit function and its relevance to her overall audit strategy and audit planCorrect
  3. COnly whether the audit committee has asked her to use the work
  4. DWhether the internal audit function has also audited the statutory auditor's fees

Explanation

SA 610 (Revised) requires the external auditor, as a basis for determining the areas and extent of use, to consider the nature and scope of the internal audit work performed or planned and its relevance to the overall audit strategy and audit plan. Seniority or audit committee requests are not the stated basis.

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