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CS Professional · Internal and Forensic Audit · Reporting under Internal Audit

Which of the following is an example, given in SA 610 (Revised), of internal audit work that the external auditor can use?

Observation of inventory counts is a listed example of internal audit work the external auditor can use. SA 610 (Revised) also lists control operating effectiveness tests, limited-judgment substantive procedures, tracing transactions, and regulatory compliance testing, whereas the opinion and key judgments stay with the external auditor.

  1. AExpressing the opinion on the true and fair view of the financial statements
  2. BDetermining the materiality for the financial statements as a whole
  3. CObservation of inventory countsCorrect
  4. DDeciding the overall audit strategy for the engagement

Explanation

The listed examples include testing operating effectiveness of controls, substantive procedures involving limited judgment, observations of inventory counts, tracing transactions through the information system, and testing compliance with regulatory requirements. Opinion, materiality and strategy rest with the external auditor.

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