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CA Final · Advanced Auditing, Assurance and Professional Ethics · General Auditing Principles and Auditors Responsibilities

Nirmal Pharma Ltd outsources its inventory-holding records to a service organisation. The service auditor who issued the report for the service organisation is a member of the Institute of Chartered Accountants of India. The user auditor, CA Dev, is evaluating that report. Per the Indian modification to SA 402, what is the position on assessing the service auditor's professional competence?

SA 402 requires the user auditor to assess the service auditor's professional competence, except where the service auditor is also a member of the Institute of Chartered Accountants of India. Since this service auditor is an ICAI member, that competence assessment is not required.

  1. AAssessment of competence is required in every case, including for members of ICAI
  2. BAssessment of professional competence is required except where the service auditor is also a member of ICAICorrect
  3. CAssessment of competence is never required for any service auditor
  4. DAssessment of competence is needed only when the service organisation is listed

Explanation

The material modifications note that SA 402 requires assessment of the service auditor's professional competence except where the service auditor is also a member of ICAI. As this service auditor is an ICAI member, the competence assessment is not required. The first option ignores this Indian exception.

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