An Organization Has Acquired a New Line of Business

question 136

Multiple Choice

An organization has acquired a new line of business. None of the organization's internal auditors have the required expertise to perform an internal audit of the new business line; therefore, the chief audit executive (CAE) has contracted the services of an external audit firm to perform the engagement. The CAE has assigned a member of the internal audit team to assist the external team with the engagement. According to the Standards, which of the following statements is true regarding supervision of the engagement?

• A) The CAE may rely upon the external firm's auditor in charge to supervise the engagement.
• B) The external firm's auditor in charge must defer to the judgment of the CAE for any disputes.
• C) The CAE is not responsible for the quality of an audit performed by an external firm.
• D) The CAE should not assign an inexperienced staff member to assist with the engagement.

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Definitions:

Decision Maker

An individual or entity responsible for making choices or deciding on a course of action.

Opportunity Loss

The forfeit of possible benefits from different options when a specific choice is made.

Prior Probabilities

The probabilities that are assigned to events or hypotheses before any relevant evidence is taken into account.

Payoff Table

A decision-making tool that outlines the possible outcomes and their respective returns or losses for different actions or decisions under consideration.