An auditor is performing an audit of a nonissuer. The auditor decides to use the work of an internal auditor to assist in the audit of accounts receivable. Which of the following judgments must the external auditor make?

Answer options:

The materiality of the accounts receivable balance.

The competence and objectivity of the internal auditor.

The sample size to be used.

All significant judgments concerning the audit of accounts receivable.

How to approach this question

Using Internal Auditors: You can use their hands (work), but not their brain (judgment). You make the calls.

Full Answer

D.All significant judgments concerning the audit of accounts receivable.✓ Correct

AU-C 610 states that the external auditor has the sole responsibility for the audit opinion and must make all significant judgments in the audit engagement. The internal auditor can perform procedures, but the external auditor must evaluate the results and conclude.

Common mistakes

Thinking the internal auditor can decide on sample sizes or evaluate sufficiency.

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