ExpertHard1 markMultiple Choice
CPA · Question 30 · Area II: Risk Assessment
An auditor is considering the use of the internal audit function in the audit of a nonissuer. The auditor plans to use internal auditors to provide direct assistance in performing substantive tests of details. Which of the following is a requirement for this use?
An auditor is considering the use of the internal audit function in the audit of a nonissuer. The auditor plans to use internal auditors to provide direct assistance in performing substantive tests of details. Which of the following is a requirement for this use?
Answer options:
A.
The internal auditors must be independent of the entity.
B.
The external auditor need not supervise the internal auditors if they are competent.
C.
The internal auditors can make significant judgments regarding the sufficiency of evidence.
D.
The external auditor must obtain written acknowledgment from management and the internal auditors regarding confidentiality and objectivity.
How to approach this question
Direct Assistance = Borrowing staff. You need a contract (written agreement) saying they will listen to you and keep secrets.
Full Answer
D.The external auditor must obtain written acknowledgment from management and the internal auditors regarding confidentiality and objectivity.✓ Correct
D
When using internal auditors for direct assistance, AU-C 610 requires the external auditor to obtain written acknowledgment from management and the internal auditors regarding the internal auditors' objectivity and their understanding that they must follow the external auditor's instructions and maintain confidentiality.
Common mistakes
Confusing 'Objectivity' (state of mind) with 'Independence' (status). Internal auditors cannot be independent.
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