[snowwing3731]

NINJA Question –

An internal auditor’s work would most likely affect the nature, timing, and extent of an independent CPA’s auditing procedures when the internal auditor’s work relates to assertions about the:

A. existence of contingencies.

B. valuation of intangible assets.

C. existence of fixed asset additions.

D. valuation of related party transactions.

Correct answer is C. 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.

But I think other there situations would be more easily affect the nature, timing, and extent because A,B and D are more subjective than C. Did I understand this question correctly or not?? Confused, please help.

[Anonymous]

Since existence requires the least subjectivity, the external auditor can rely on the internal auditors evaluation instead of having to to perform the work themselves. The other choices are more subjective, so the external auditor is least likely to rely on the work of the internal auditor.

[Liss, Master of Coin]

I believe it is because A,B and D are more subjective that it's up to the independent/external auditor to audit them; they can't be entrusted to an internal auditor.

Because fixed assets are less subjective, the external auditor can have an internal auditor audit that class of transactions. Thus freeing up the external auditors time to audit the more subjective items.

CPA (MA, Non-Reporting)

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[snowwing3731]

@liss_ will_be_a_CA_CPA and @cariboulou32

Thanks! Can I understand this questions as: Which procedures results do external auditors most likely trust delivered from internal auditors? I guess I am confused about the way the question asked. If translate the question as : Which of the following procedures are mostly likely external auditors will assign internal auditors to work on? Then I will definitely choose C.

[Anonymous]

I'm not sure of your question sorry, it seems there may be a slight language barrier?

[Anonymous]

The more judgment the more the auditor needs to be involved. The less judgment the more internal can be involved.

[rp 12]

Yes, basically IA of client can help in less subjective areas of audit. For example, I have assigned some Walkthroughs and TOC's of AP, AR, Payroll, and FA to IA dept. of my client. High risk, and subjective areas are done by external auditors.

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