M6 Flashcards
(12 cards)
When internal auditors provide direct assistance, or their work is used to obtain audit evidence what must the external auditor evaluate
Competence (education, certification, performance)
Objectivity (who the auditor reports too, should report to legal or those charged with governance, not a controller)
Audit evidence: competence objectivity &
Whether the internal audit function applies a systematic disciplined approach including QC (a system is in place)
What is a specialist?
A person or firm in a field other than accounting or auditing
Why does an auditor need sufficient understanding of a specialist’s field?
Evaluate the relevance, reliability and adequacy of their work
Determine nature, scope, objectives of the work of the specialist
Determine if mgmt.’s specialist evidence is sufficient
Can an auditor use a specialist with a relationship with the client?
Yes but additional procedures should be used to determine objectivity
What is contained in an agreement with a auditor specialist?
The nature scope and objectives of the work of the auditor’s specialist
The roles and responsibilities of the specialist
The nature, timing, and extent of communication between the auditor and their specialist
The need for confidentiality
When should a specialist be referenced in the auditor’s report and what else should be stated?
A specialist should only be mentioned if an opinion is modified.
An auditor may refer to a specialist if
-The modified opinion due to the auditor’s specialist findings
-An explanatory paragraph is added to the auditor’s report
-It helps users understand a CAM or KAM
*Auditor’s must state the reference to a specialist does not reduce the auditor’s responsibility for the audit opinion.
Are IT auditors specialists?
No
What must group auditors evaluate in component auditors?
Competence, capability, objectivity
*These must be confirmed regardless of whether the group auditor uses the component auditors work
What is contained in the written agreement with component auditors?
The nature, scope and objective of the work of the component auditor
The respective roles and responsibilities of the group auditor and the component auditor
-The nature, extent and timing of communication between auditors
What written affirmation must lead auditors obtain from other auditors
the other auditor’s policies and procedures in place to ensure compliance
A description of all relationships that may have an impact on their independence
A written affirmation that they are in compliance with the requirements.
When does an internal auditor’s work affect the nature, timing and extent of the independent auditor’s process?
When it relates to items with very little subjectivity such as fixed assets. (auditor’s can only rely on internal auditors for low risk items
Which plan is more detailed the internal auditor or the independent CPA
The internal auditors plan is more comprehensive.
