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CS Professional · Internal and Forensic Audit · Internal Audit Engagements and Planning

Under SA 610 (Revised), which of the following is listed as a significant judgment that remains the external auditor's own responsibility, even where internal audit work is used?

Assessing the risks of material misstatement is a significant judgment that stays with the external auditor. SA 610 (Revised) says the external auditor has sole responsibility for the audit opinion, so it cannot hand these judgments to internal audit. Charter drafting and plan approval are not external audit judgments.

  1. APreparing the entity's bank reconciliations
  2. BAssessing the risks of material misstatementCorrect
  3. CDrafting the internal audit charter
  4. DApproving the internal audit plan

Explanation

SA 610 (Revised) states the external auditor has sole responsibility for the audit opinion and must make significant judgments, including assessing the risks of material misstatement, evaluating sufficiency of tests, going concern, significant estimates and adequacy of disclosures. The other tasks belong to management, the audit committee or the internal audit function.

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