@LKD – C is correct.
Per the following explanation…
An internal auditor's work may affect the nature, timing, and extent of an independent auditor. AU-C 610.22 states:
In making judgments about the extent of the effect of the internal auditors' work on the auditors' procedures, the auditor considers:
• the materiality of the financial statement amounts—that is, account balances or classes of transaction.
• the risk (consisting of inherent risk and control risk) of material misstatements of the assertions related to these financial statement amounts.
• the degree of subjectivity involved in the evaluation of the audit evidence gathered in support of the assertions.
Of the responses listed, fixed assets represent a class of assets and transactions that would have the least degree of subjectivity involved in the evaluation of the audit evidence gathered in support of the assertions.
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With that being said, I do understand the fact that fixed assets is the option that is the least subjective. However, when I read the explanation I would think that the choice that has the “most subjectivity” would have the “most likely effect” on the nature, timing and extent on the procedures.
What am I missing?
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