An auditor is planning the audit of a nonissuer and intends to use the work of the client's internal audit function to assist in obtaining audit evidence. Under AU-C 610, which of the following tasks may the auditor assign to the internal auditors to perform under direct assistance?

Answer options:

Determining the materiality levels for the financial statements.

Evaluating the sufficiency of audit evidence obtained.

Testing the operating effectiveness of lower-risk controls.

Assessing the inherent risk of material misstatement for significant accounts.

How to approach this question

Distinguish between 'Direct Assistance' (doing work for the auditor) and 'Using the Work' (relying on their past reports). High judgment/high risk areas CANNOT be assigned.

Full Answer

C.Testing the operating effectiveness of lower-risk controls.✓ Correct

Testing the operating effectiveness of lower-risk controls.

AU-C 610 prohibits using internal auditors for making significant judgments (materiality, risk assessment, evaluating evidence). However, they can perform procedures like testing lower-risk controls under the direction and supervision of the external auditor.

Common mistakes

Thinking internal auditors can do anything if supervised.

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