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CA Intermediate · Auditing and Ethics · Audit Strategy, Audit Planning and Audit Programme

While planning the audit of Kaveri Foods Pvt. Ltd., the auditor finds that the company's internal audit function has been working on inventory counts and wishes to use some of its work as audit evidence. Which planning step is most consistent with SA 610 and SA 300?

The auditor should evaluate the internal audit function's objectivity, competence and disciplined approach, plan the extent of use accordingly, and still retain sole responsibility for the audit opinion. Wholly relying on it, ignoring it, or delegating the opinion is inconsistent with SA 610.

  1. AEvaluate the internal audit function's objectivity, competence and systematic approach, and plan the extent of use accordingly, while retaining sole responsibility for the opinionCorrect
  2. BRely entirely on the internal auditor's work and reduce the reference to it in the audit report
  3. CDisregard internal audit work because the auditor's independence forbids any use of it
  4. DDelegate to the internal auditor the responsibility for forming the opinion on inventory

Explanation

SA 610 requires the external auditor to evaluate the internal audit function's objectivity, competence and systematic, disciplined approach before using its work. The auditor retains sole responsibility for the opinion and cannot delegate it or rely wholly without evaluation. Complete disregard is not required, as use is permitted after evaluation.

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