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

Sunrise Pharma Ltd uses an outsourced payroll processor, and the auditor, CA Rohan, has obtained a Type 2 report prepared by the processor's auditor, CA Dinesh, who is a member of ICAI. Under the material modifications to SA 402 noted for India, what is different from ISA 402 regarding the assessment of CA Dinesh as service auditor?

Under the Indian SA 402, the user auditor must 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 CA Dinesh is an ICAI member, that competence assessment is not required, unlike in ISA 402.

  1. ANo assessment of the service auditor is required in any case under SA 402
  2. BThe assessment of professional competence is not required where the service auditor is also a member of the Institute of Chartered Accountants of IndiaCorrect
  3. CAssessment of independence is replaced with assessment of the entity's size
  4. DAssessment of competence is required only for public sector entities

Explanation

The material modifications state that SA 402 requires assessment of professional competence except where the service auditor is also a member of ICAI. Dinesh is an ICAI member, so that competence assessment is not required. The other options misstate or invent exemptions.

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