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CMA Intermediate · Corporate Accounting and Auditing · Brief Introduction to Auditing Standards

Under SA 200, an auditor of Narmada Foods Ltd. wishes to use information obtained in the previous year's audit as part of current audit evidence. Which condition applies?

Information from previous audits may serve as audit evidence provided the auditor has determined whether changes since the previous audit may affect its relevance to the current audit. It cannot be used blindly, nor is it barred outright, because evidence is cumulative in nature.

  1. AIt can never be used because evidence must be generated afresh each year
  2. BIt may be used provided the auditor has determined whether changes have occurred since the previous audit that may affect its relevance to the current auditCorrect
  3. CIt may be used without any consideration if the same audit team conducted the earlier audit
  4. DIt may be used only if the entity's management certifies it in writing

Explanation

SA 200 says audit evidence may include information from previous audits, provided the auditor has determined whether changes have occurred since that audit that may affect its relevance to the current audit. Never using it, or using it without checking, is incorrect.

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