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CS Professional · Compliance Management, Audit and Due Diligence · Audit Principles and Techniques

Vikram, an auditor, is planning the audit of Yamuna Retail Ltd and wants to judge whether his professional judgment in setting the audit strategy was sound. Under SA 200, professional judgment is evaluated on whether it:

Professional judgment is evaluated by whether it reflects a competent application of auditing and accounting principles and is appropriate in light of, and consistent with, the facts and circumstances known to the auditor up to the date of the auditor's report.

  1. AReflects a competent application of auditing and accounting principles and is consistent with the facts and circumstances known to the auditor up to the date of the auditor's reportCorrect
  2. BProduces the lowest audit cost for the client
  3. CMatches the conclusions reached by the management in the prior year
  4. DIs supported by the auditor's seniority in the firm

Explanation

SA 200 states that professional judgment can be evaluated based on whether it reflects a competent application of auditing and accounting principles and is appropriate in light of, and consistent with, the facts and circumstances known to the auditor up to the date of the auditor's report. Cost, prior-year management views and seniority are not the test.

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