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

While planning the audit of Narmada Foods Ltd, the external auditor considers delegating certain tasks to the internal audit team. Which of the following is a significant judgment that SA 610 (Revised) treats as one the external auditor must make and cannot hand over?

Assessing the risks of material misstatement is a significant judgment that the external auditor must make personally. SA 610 (Revised) also lists evaluating test sufficiency, going concern, significant estimates and disclosure adequacy. Routine clerical or logistical tasks are not such judgments.

  1. AAssessing the risks of material misstatementCorrect
  2. BPreparing the schedule of fixed asset physical verification counts
  3. CArranging the logistics of the client's year-end stock count
  4. DPhotocopying bank confirmations for the working paper file

Explanation

SA 610 (Revised) lists the significant judgments: assessing risks of material misstatement, evaluating sufficiency of tests performed, evaluating management's use of the going concern assumption, evaluating significant accounting estimates, and evaluating adequacy of disclosures and other matters affecting the report. The other options are routine tasks, not significant judgments.

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