ACCA · Question 09 · Internal Control
CASE SCENARIO: AgriGrow Tech Ltd
AgriGrow Tech Ltd is an agricultural technology startup developing drone-based crop monitoring systems. You are planning the audit for the year ended 30 September 20X6. AgriGrow has capitalized significant Research & Development (R&D) costs this year related to a new AI-driven drone model. They also received a substantial government grant conditional on creating jobs in rural areas. Due to rapid growth, AgriGrow recently established an internal audit department, which has spent the last three months reviewing the company's payroll controls.
QUESTION:
You are considering relying on the work performed by AgriGrow's internal audit department regarding payroll controls. According to ISA 610 (Using the Work of Internal Auditors), which of the following must you evaluate FIRST before deciding to use their work?
Answer options:
The sample sizes used by the internal auditors in their payroll tests.
The organizational status and relevant policies and procedures supporting the objectivity of the internal auditors.
Whether the internal audit department has discovered any fraud in the payroll department.
The cost savings that will be achieved by relying on the internal audit work.
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