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

While auditing Sundaram Auto Ltd., an external auditor finds that the area involves a high degree of judgment in evaluating audit evidence. How should the auditor plan the use of the internal audit function's work in this area?

The auditor should use less of the internal audit function's work and perform more procedures directly. The greater the judgment involved in planning, performing and evaluating audit procedures, the less the internal audit work alone can provide sufficient appropriate audit evidence.

  1. AUse more of the internal audit work and perform fewer procedures directly
  2. BUse less of the internal audit work and perform more procedures directlyCorrect
  3. CUse the internal audit work entirely because it is independent of management
  4. DUse the same extent of internal audit work as in low-judgment areas

Explanation

SA 610 (Revised) states that the more judgment involved in planning and performing procedures and evaluating evidence, the less of the internal audit function's work should be used and the more work performed directly. Relying on internal audit alone would not give sufficient appropriate audit evidence in such areas.

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