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

Sundaram Pharma Ltd has an internal audit function. The external auditor, CA Neha, wants to decide the areas and extent in which it can use the internal audit work. Which is the basis SA 610 (Revised) requires her to consider?

She should consider the nature and scope of work that internal audit has performed or plans to perform, and its relevance to her overall audit strategy and audit plan. SA 610 (Revised) uses this as the basis for deciding areas and extent of use.

  1. AThe size of the internal audit department relative to the finance team
  2. BThe nature and scope of work performed or planned by internal audit and its relevance to her overall audit strategy and audit planCorrect
  3. CThe fee charged by the internal audit function
  4. DThe preference of the audit committee chairperson

Explanation

SA 610 (Revised) requires the external auditor to consider the nature and scope of the work performed or planned by the internal audit function and its relevance to the overall audit strategy and audit plan. Department size, fees or preferences are not the stated basis.

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