Internal Audit Reliance – NBC Institute

AAA – Nov 2016 – L3 – Q3a – Internal Audit and Corporate Governance

Evaluate reliance on internal auditors for cash sales testing and significance of specialist reports as audit evidence.

Question

You are the Audit Manager in charge of the audit of Mix Biz, a company which runs a chain of snack bars operating in a number of strategic locations in Lagos. Your firm has been the auditor for a number of years and has always had to substantively test cash sales because of lack of control over the recording of takings. The audit reports to date have been unmodified.

You have recently been informed that the company has employed a newly qualified Chartered Accountant as Chief Internal Auditor and a partly qualified Assistant Internal Auditor. Since their appointment halfway through the year ended December 31, 2015, they have spent most of their time carrying out substantive tests on cash sales.

The Directors are hopeful that your audit fee this year will decrease because you will be able to rely on the work carried out by the Internal Auditors.

Required:
a. Explain the issues that will be relevant to your firm in deciding:
i. whether you can rely on the work performed by the Internal Auditors (8 Marks)
ii. how much reliance to place on that work (7 Marks)

Answer

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Tags: Audit evidence, Audit Fee Reduction, Internal Audit Reliance, Specialist Reports
Level: Level 3

Topic: Internal Audit and Corporate Governance

AAA – Nov 2016 – L3 – Q3a – Internal Audit and Corporate Governance

Evaluate reliance on internal auditors for cash sales testing and significance of specialist reports as audit evidence.

Question

The Directors are hopeful that your audit fee this year will decrease because you will be able to rely on the work carried out by the Internal Auditors.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit evidence, Audit Fee Reduction, Internal Audit Reliance, Specialist Reports
Level: Level 3

Topic: Internal Audit and Corporate Governance

Question Tag: Internal Audit Reliance

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AAA – Nov 2016 – L3 – Q3a – Internal Audit and Corporate Governance

Evaluate reliance on internal auditors for cash sales testing and significance of specialist reports as audit evidence.

AAA – Nov 2016 – L3 – Q3a – Internal Audit and Corporate Governance

Evaluate reliance on internal auditors for cash sales testing and significance of specialist reports as audit evidence.

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AAA – Nov 2016 – L3 – Q3a – Internal Audit and Corporate Governance

Evaluate reliance on internal auditors for cash sales testing and significance of specialist reports as audit evidence.

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AAA – Nov 2016 – L3 – Q3a – Internal Audit and Corporate Governance

Evaluate reliance on internal auditors for cash sales testing and significance of specialist reports as audit evidence.

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